KEY POINTS:
Most 22-year-olds do not have the confidence and skills to set up a multi-million-dollar business in their homes but that is exactly what Paul Manning and his friend, Ant Hassett, did.
Paul's first job was as a marketing executive at Auckland's Fullers ferry services. He soon realised that
there were advertising agencies catering for large clients, or for small clients who had large amounts of money to spend, but not for others.
There was also a major lack of co-ordination in service provision. Paul spent his time running between radio stations, designers and jingle writers and wondered why there was no single agency in the marketplace that could provide all of these services.
His next job was with Fairfax Media, where he managed advertising accounts. The division had not made budget for three years and when Paul talked to advertisers, he found out why. Their advertisements were not working, so they did not want to keep advertising.
Paul set about designing new ads for some of the clients. The clients saw that advertising achieved results and that portfolio soon became the largest portfolio in the group. When Paul left Fairfax, a couple of advertisers contacted him and said that their business had fallen back again. They wanted him to create more ads for them. In particular, the owner of the $2 Shop franchises sought assistance.
Paul knew he had the creativity to produce what was required, while his friend Ant was a Mac operator and had the technical skills to make the ads. Paul began working from his home in 1999 and Ant set up his computer in his house. Administration was done at Paul's home.
While the business got off the ground, Ant freelanced as a Mac operator and Paul worked for a publishing company. The $2 Shop was so impressed with the work Paul and Ant had done that they were invited to the national franchise conference. Paul gave a presentation explaining why his ads were effective and says the store owners were so eager to use his services that they "just about jumped over the boardroom table at me". Several days later, Paul and Ant were invited to New Plymouth and offered a contract to do the franchises' $600,000 ad spend, which meant revenue of $120,000.
That was enough for Paul to quit his job and devote himself full-time to the home business. They built up a customer base by Paul doing what he knew. He went through newspapers and looked at advertisements, found those that were not working, and redesigned them. The ads were sent to targeted prospects, with a 50 per cent success rate in winning business being achieved. Paul and Ant quickly picked up lots of small clients with between $50,000 and $100,000 to spend.
However, they soon realised that the industry they were in was very conscious of perception.
The fact that Paul and Ant worked from home meant that clients expected to pay work-from-home rates rather than the full commercial amount. "And you can't get the bigger clients," says Paul. "My aspirations for the agency were big. I felt it was important to be in the city so people would be able to meet with us."
The pair accordingly rented space in Karangahape Rd. Although it appeared to be an office, it was in fact an apartment. Paul and Ant both lived on the premises for the first year of Metromedia's operation.
Paul says working and living in the same space gave them the ability to spread costs and shifting into the city was a good business move. The firm slowly began to get bigger, and attract the interest of larger organisations, such as those in the local government sector.
But Paul says that, ultimately, it was still other agencies that got the "really juicy accounts" because Metromedia continued to be regarded as a small operation.
He and Ant therefore again started looking for premises. They were taken to an office in Queen Street, with an entire floor available. The pair could see the potential, thought the space would be fantastic and were excited that it was within their budget.
The following day, however, the real estate agent contacted them to say that he had made a mistake. The rent was in fact three times what he had originally told them.
Paul was heartbroken, but says that he and Ant then decided to take a leap of faith. They decided that the barrier to growth they faced was the perception that they were too small. They wanted to grow, and taking on the big space offered the opportunity to do that.
At the start, the rent was so high that they could not afford to run the air conditioning. They placed a large sign in the reception area and ensured that the boardroom was immaculate. The rest of the office was furnished with ratty old furniture and both Paul and Ant lived on the premises for a time.
Paul says that renting the large space immediately changed the market's perception of their business. They were showing that they could box above their weight, and large clients soon followed.
In 2005, Paul won the Young Entrepreneur category of the Ernst & Young Entrepreneur of the Year awards. The business by then employed 31 staff and had grown into a full-service marketing communications provider, offering a creative team, media services, print and production management, photography, brand strategy, event management and sponsorship leveraging.
The award generated a lot of publicity for the business, helping it to land the Fuji Xerox account.
By 2006, Metromedia was a $10 million to $15 million business and the largest privately owned advertising agency in New Zealand. Paul and Ant had the opportunity to meet with Ogilvy, which is 65 per cent owned by the Australian STW Group. At the end of that year, Paul and Ant sold them 90 per cent of the shares in Metromedia, holding on to 5 per cent each.
Paul remains the managing director and says that Metromedia can still operate somewhat independently. He says that the decision to sell was not difficult.
It was the obvious next step required to take Metromedia to the next level. Large clients require an agency with an international network and Ogilvy has almost 500 offices around the world.
"History says the size we got to is about as big as any private New Zealand agency has got to in the last 10-15 years."
* www.metromedia.co.nz
