Advertising and Agencies and Communications and Media & Marketing

Veteran local ad exec Pearson lands on his feet after closing firm

September 25, 2010

Ron Pearson has been called a creative genius and one of the best advertising copywriters in the Indianapolis market.

He made HHGregg known for its ads featuring two spiky-haired twins, former television newscaster Ken Beckley and singer Reba McEntire.

He took the blasé world of banking and made it memorable using green frogs in Merchants Bank ads.

In July, Pearson found himself out of a job.

Pearson factboxThe latest twist in the long and winding career path of one of Indianapolis’ top ad men has many in the advertising game wondering if the demise of the agency Pearson founded 33 years ago signals an end to an era.

“It makes you wonder if people put value on the creative side of advertising they once did,” said David Morton, president of locally based sports marketing firm Sunrise Sports Group. “The margins on advertising have been squeezed so tight in recent years, it makes you wonder if there’s room anymore for great creatives like Ron Pearson.”

Pearson, 62, isn’t ready to write his own epitaph just yet. Though his firm, Pearson Partners, closed 10 weeks ago, Pearson is still finishing up clients’ work.

And when he’s done with that, he has no intention of retiring.

“I can see myself working at least another five years,” said Pearson, who recently took a position as vice chairman, of counsel, for Floyd and Stanich Inc. ad agency.

Sitting in Floyd and Stanich’s office, Pearson seems long removed from the halcyon days at his firm, which over the years was known by a variety of monikers—all bearing his name.

At its height, Pearson’s agency had 45 employees and $46 million in annual billings. Floyd and Stanich has four employees, including Pearson.

Some of the biggest names in local advertising spun out of Pearson’s shop. They include Dean Johnson, Lloyd Brooks, and the founders of Young & Laramore.

“The agency was built on creativity from the very beginning, and we had a lot of really great people,” said Larry Fletcher, who left Pearson’s agency as a partner three years ago. “We had people, and that includes Ron, who knew how to make a real connection with an advertiser’s clients.”

It isn’t lost on Pearson that small firms like Floyd and Stanich are the very type he counseled clients to avoid.

“We sold ourselves on having everything in-house,” Pearson said. “At our height, we had eight creatives, a number of account executives, a full-time media department, a print production manager and a proofer on staff.”

The agency’s size added to its demise. About 65 percent of the agency’s overhead was payroll, Pearson said.

“There was a paradigm shift, and we were part of the old paradigm,” Pearson said. “At a small firm, you don’t have to pay the health care, there’s no 401(k), no matching FICA, Worker’s Comp, and you don’t need the infrastructure to house all those employees.”

Floyd and Stanich is part of the “new paradigm,” Pearson explained. The firm works with “preferred free-lancers” to maintain the kind of continuity Pearson prized at his larger firm.

The trend toward cutting advertising budgets started a decade ago, said Bob Gustafson, Ball State University advertising professor.

“That trend greatly accelerated in 2007 and 2008 as the economy started to tank,” Gustafson said. “The economy didn’t play any favorites and large firms got squeezed right along with the smaller ones.”

In fact, he said, the current economic swoon is arguably harder on large firms.

“Some of the captains of these agencies were piloting a battleship or a luxury liner,” Gustafson said. “They just had so many fixed costs, they were difficult to steer through this downturn.”

Smaller firms, Gustafson said, can afford to do things cheaper. When work slows down, free-lancers—unlike full-time staffers—simply don’t get paid.

Large firms endure, though. The likes of Young & Laramore and Hirons & Co. have survived by diversifying and broadening their geographic territory. But Y&L CEO Paul Knapp said many of the survivors have had to downsize.

Pearson took a huge blow in April 2007, when local electronics and appliance retailer HHGregg decided to switch its $25 million advertising account to Florida-based Zimmerman Advertising.

Profit margins on the account had become so tight Pearson decided not to compete when HHGregg put the account up for bid in early 2007. It was an account Pearson had landed on a handshake 26 years earlier.

Pearson scoffs at Zimmerman’s Gregg ads.

“It doesn’t past the idiot test,” he said. “Do people warm up to an animated circular?”

But the Gregg account wasn’t the only blow. After that loss, Pearson said, one client cut its ad budget by $1.5 million annually, and several others cut theirs altogether.

When it closed, the agency had 14 employees.

“The hardest thing was telling the employees we weren’t going to be able to go on,” Pearson said. “I encouraged them to keep working for the clients they were involved with. I promised never to pursue those accounts as long as they were working on them.”•

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