About four years ago, my agency became a toy company. No kidding. We built and manufactured Totoya, a baby monitor cleverly disguised as a cuddly stuffed creature. Our biggest takeaway from the experience? It’s much harder and way more stressful to be a client than an agency.
When you’re an agency, you have challenges, of course. But you also helicopter in after your client has made many tough decisions. If you don’t provide value, you’ll lose the client, but you have a lot less skin in the game. They have to design products; sort out supply chains; look for partners; and handle angry (or happy) customers. In our case, we had to shop Totoya around toy shows, hoping the good people at Hasbro would notice us.
In spite of the risk and difficulties, however, we decided to continue building new things after Totoya. Since then, we’ve released both physical and app-based games, one of which is doing pretty well. (If you’re curious, you can find it here.) We still do traditional advertising, of course, and we’ve found plenty of synergy between the two. But here’s why we think the toy business, or any side business that forces you to build your own product, is good for an agency like ours.
- It’s wow for our team. Working on an innovative project is fun. There are no rules to follow, clients to please or great ideas that get lost because no one wants to take a chance. Our people can dream whatever they like and then make it happen. They love it so much that we have to rotate them on and off these projects, so everyone can share the fun and go back energized.
- It gives us recognition we can’t get anywhere else. Our office works out of Budapest, Hungary. I think we do great work and have talent equal to anywhere in the world, but with that address and local clients, it’s hard to get the same recognition as a New York agency that’s plugged into the scene. Products level the playing field for everyone. The Rubik’s Cube came from Hungary, too, and it did just fine. As a result, our team is excited to read news articles about their creations in places like Japan, New Zealand or Russia.
- It’s risky, but you can calculate it. We mainly work on apps and games, where the profit is easy to calculate. If you charge $3 per game, for example, you may know that you have to get 30,000 downloads to break even. And if it goes viral, you have a very profitable product. So long as your agency business is solid, you should be able to take on this kind of risk. Just make sure you’re OK with failing most of the time, because you will.
- It’s great PR. When Mattel releases a new board game, it gets attention if it’s good. When Mattel’s agency releases its own board game, it gets attention no matter what. Product innovation at an agency is still pretty unusual, and it gets people excited. While you may not have great success for your product, you’ll always get a lot of free PR. And that never hurts.
- It helps sell. Last year, we were pitching for a project in Paris and brought a Totoya as a gift for the CMO. It turned out she already had one, and her kids loved it. Needless to say, we won the pitch. Having an innovative product — and a reputation for innovation — can be a great selling point for your regular agency work.
Obviously, innovation is not for everyone. If you don’t have a solid base for your business, you can’t afford it. Some agencies also find it difficult to move from an hourly billing model to one where you’re trying to launch a great product. Some people also don’t want to face the risk of failure. However, in an era where everyone is trying to innovate, I’d argue that the riskiest move of all is to sit on the sidelines.
The best thing about innovation, though? You get to choose what you build. Some agencies are way into food and coffee, so they can work on culinary apps. Some love football, so why not create something that enhances your enjoyment of the sport? In our office, we love games, so we build games we’d love to play. When you have your passion as your motivator, you’ll always do great things.
Krisztian Toth is CEO of POSSIBLE in Budapest.