Honesty Part 4 – The Secret Recipe of Honesty

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From starting Honesty AB on Valentine’s Day 2009, I worked alone for 8 months before the first new partners came into the agency. During that time I conducted what I think today is the most important work I’ve done at the agency: finding the right people to run it.

An advertising agency is made up of people. This means that finding the right people is the absolute key to succeeding in an agency start up. I feel that I’m beginning to approach a point where I can stop looking at my agency as a venture and start looking at it as a successful company, and thus, I feel confident that I’ve done something right in choosing the right people. There are probably several good strategies for doing this, but let me share with you mine:

When I started the company Honesty AB on that day a little more than two years ago, I already had a really good feeling about most of the people who would eventually end up in the circle of partners. I had worked with Martin and Petrus for 6 months already at my last agency and I had a good understanding for the strengths of Emil, who was then the client director at McCann Nordic. Jesper wasn’t on my radar until some months later when I got him recommended to me by the amazing online specialist Judith Wolst, who simply said that “you have GOT to meet this guy”. (Thanks Jud).

There were several other ideas for good people (thank you all for taking the time to meet me back then), but there were several benefits in choosing these particular people (and hopefully for them to choose me of course).

To understand why these particular people were so great you have to know my model of agency building. There are two key parts: strategy and culture. The first of these two things is about doing the right things, while the second is about doing them right.

In my mind, an ad agency is made up of three ingredients and one goal. The goal is always sales. Of something. Most of the time it’s in monetary terms, but sometimes it can be other things like votes in the case of politics for example. The ingredients are always brand, traffic and conversion rate. Sales are exactly equal to traffic (online or offline) times conversion rate. The brand influences both traffic and conversion rate. The model looks like this:

In this model, the letters stand for the following:

S = Sales
T = Traffic
Cr = Conversion rate
B = Brand

To that you can add price P which is also potentially affected by the brand. Then traffic T times conversion rate Cr times price P equal revenue R.

P = Price
R = Revenue

Important to note here is that NO MATTER WHAT we do with the brand and in traffic generation, it always has to go through the gatekeeper of conversion rate. Increasing conversion rates from, say, 4% to 8% will double your total sales. Nuff said.

At any point in time we can choose to focus on one or more of these areas (there is a spill-over effect too of course) depending on what our situation is. We may have excellent traffic but poor conversion rate. Focusing on traffic in that situation is like tuning a Ferrari to go on a gocart course. We may have excellent conversion rate too, and then we may want to raise the price. To do that we need to focus on increasing value perception in the brand. And so on. This model makes us focus on the right things, and quite Honestly, there are very few agencies that focus on tuning conversion rates at any point.

The culture at Honesty is a friendly one. We aren’t very cool and there is a laid back vibe when it comes to dress code and power napping on the floor. But also, there is a VERY strong delivery culture where churning out great stuff comes first. This combination is lethal in that all energy goes into what comes out of the agency in terms of results. This makes us extremely quick and productive which has been a key ingredient in winning pitches (so far we have won 100% of pitches). Flooding pitches with creative work has been a strategy we’ve come up with on our own, but when I read David Ogilvy’s “Confessions of an Ad Man” the other day, I realized that he had the exact same strategy in the 70’s and 80’s with extraordinary results.

Advertising People Like
For building the brand, likeability is key. We’ve seen in our own results as well as external research that there is a strong correlation between advertising people like and liking the brand that is advertised. (We’ve also seen strong correlation between liking the brand and buying it). For that reason and because liking advertising and shareing it are also strongly correlated, “Advertising People Like” has become our internal mantra and basic rule of engagement. Creating advertising people like requires strong storytellers with a good sense of humor.

For creative, Martin Marklund and Petrus Kukulski were highly creative, great storytellers, extremely fast and productive and, perhaps most importantly, worked things through to the end. They would actually work with a print, a radio spot or a film all the way through direction, filming and editing and would never just ship an idea off to production company and keep their fingers crossed. This is a major reason for why their creative work turns out so well and this has also seeded the idea of keeping as much production as possible in house at Honesty, a practice that is a key part of our success both financially and creatively.

For online, Jesper Åström is the master of two things: traffic generation and conversion. And as you can see in the model, these two things are key to creating sales (they ARE sales). Mastering traffic generation and conversion requires deep understanding of psychology and game theory, but also in depth knowledge and understanding of social sites like Facebook and search engines like Google. Jesper has all these skills in spades and the enthusiasm to go with it.

Client Management
For client management, Emil Clase had a fingertip feel that few people have when it comes to making sure the client is happy. Personally, I can drive things to hard and be too focused on results sometimes and forget about the person on the other end of the line, what their mood is like, how their kids are feeling, if their dog’s surgery turned out ok or whatever might be central in their environment at the moment (it isn’t always work). And since this is a people business, these things matter. A lot. I know that if our staff are happy, they do a better job; but this also goes for clients and our relationship to them. And keeping these relationships warm, friendly and productive is a virtuoso skill of Emil’s.

The above people today make up the management team at Honesty and have been a winning combination this far. Starting with a strong team like that has been an important part of our success. But likewise, the people we have hired afterwards have been just as important. Art director’s, account managers, designers, social media manager – all these things are essential key ingredients as well.

The Recipe
This has been the basic recipe of our success this far. Feel free to copy it and try out bits and pieces for yourself; either in advertising or in other areas of business. Let me know how it turns out for you.

About the Blog

This blog is written by Walter Naeslund and has been around since 2007. The blog is about the journey of starting an advertising agency and a sneak peek behind the scenes of what goes on at the Honesty HQ in SoFo, Södermalm. It is also a blog about communication & technology. The blog has gathered almost a thousand posts over the years with several longer and shorter breaks. Welcome and enjoy.
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