John Hernandez is Owner and Partner at On Advertising, a marketing and advertising agency that has, over the past 26 years, rebranded itself, leveraged “new identities,” survived a recession, and increased and changed its client base.
In this interview, John talks about his company’s “humble beginnings” and reveals the strategic decisions that helped it grow.
Ron Meritt, a television meteorologist, started NPR Public Relations in 1993 as a side gig. He provided traditional PR for nonprofit organizations . . . working out of his house with 1 client.
In 2002, John accepted Ron’s invitation to join the business and quit his job at the television station. They took out an SBA loan to cover payroll, rebranded the company as PRfect Media, and offered a flat fee “one-stop-shop for everything” marketing solution for small businesses. In addition to traditional marketing services – billboards, TV, radio, PR, and support – they utilized video, a technology application new for marketing. John’s television-world experience – in graphic design and in scripting, shooting, and editing video – provided a differentiating and cost-saving advantage for both the agency and its clients: They didn’t need to hire outside firms for those services.
Six or seven years ago, the agency was doing a lot of non-traditional work, but people on the outside perceived them as a traditional PR firm. What to do?
How about doing the same thing the agency would do for its clients?
John and Ron tasked the agency’s employees to rebrand the company and On Advertising was born: The employees set the color palette, the logo, and the brand. In a bold move, the agency took out a revolving loan and relocated the company from a commercial building in the Phoenix suburbs to a downtown high-rise, putting their signage on a street with heavy traffic all through the day. That move almost doubled their business: they were now visible, accessible, and re-defined.
John says On Advertising has two growth strategies: to build the business organically and to expand its client base and capabilities through mergers and acquisitions. The agency still maintains its revolving credit line to even out the cash flow and to facilitate these acquisitions and mergers.
John lists a number of keys to On Advertising’s success:
He believes the company gets traction as long as it treats itself as a client: spending money on itself; boosting its website presence, Google Analytics, and social media presence; and embracing media marketing technology.
He emphasizes that it is as critically important to have “trustworthy team members on the outside” (CPA, attorneys, PEO) as it is to have good employees.
And, to weather a recession, as this company did in 1987-88: John recommends developing multiple streams of income.
John can be reached on his company’s website at: https://onadvertising.com/
ROB: Welcome to the Marketing Agency Leadership Podcast. I’m your host, Rob Kischuk, and I am joined by John Hernandez, Owner and Partner at On Advertising based in Phoenix, Arizona. Welcome to the podcast, John.
JOHN: Thank you. Thanks very much.
ROB: Fantastic to have you here. Why don’t you start off by telling us about On Advertising and what makes On great?
JOHN: I think a lot of things make us great. The way that we started was – I guess there’s a lot of similar
stories. Small business started in a house. But essentially, my business partner, Ron Meritt, had a small
public relations firm that only did traditional PR for nonprofit organizations that he started in 1993. We
worked in television together. He basically had the firm on a shelf for a little while, just working with one
client while he was a television meteorologist, actually.
We worked together at the TV station here in Phoenix and became friends. Then one day, he came up and said, “Would you like to go into business?” I’m like, “Sure,” because I was ready to get out of television after 15 years. So, we started the business. We got an SBA loan. I quit TV right on the spot, and we started the business, the two of us, in one of his bedrooms.
We changed the name from NPR Public Relations to PRfect Media. We were somewhat traditional PR, but my producing skills in television – I also knew how to write, shoot, edit, do some graphic design, so we brought that to the table.
When we did our R&D, what made us different at that time was a lot of traditional PR firms in the early 2000s and the marketing and advertising agencies, that’s all they did. They were very one-dimensional, and they weren’t very good at getting their ROI according to our research. So, we decided to bring everything to the table. We wanted to offer everything, one-stop shopping, one flat fee for everything.
It became an instant success. We started off small with very small clients, of course, and built ourselves up to where we are now. We rebranded ourselves again about 6-7 years ago to On Advertising and took on a third partner 2 years ago, and have been growing since. We now have 17 employees. We’re in a high-rise building in downtown Phoenix and doing very well.
ROB: Congratulations on all of that so far. I think one thing that’s interesting to dive into is those moments of rebranding. What made you decide at each point that it was time to rebrand? I think sometimes when we rebrand, we are trying to also move away from something that was present in the old brand. What did those different changes look like for you?
JOHN: Sometimes they’re very obvious and other times they’re not. The very obvious one was when I bought into the company and his brand was NPR Public Relations for Nonprofit. We wanted to do something that was a little bit more zingy, had something more with what we were going to do. We were going to do not just nonprofits; we were also going to do for-profit companies. We were expanding from traditional PR into, like I said, one-stop shopping.
In order to do that, we wanted to come up with something that had a little bit more oomph to it. 2000s, and we were getting into this on our own and not really sure what we were doing, but we were going to do the best we can. We came up with PRfect Media, spelled P-R-fect to emphasize the PR part. We got some traction, and that was a really good brand. We had a decent logo, not a great logo, and we built ourselves up from that.
When we got to about 8-10 employees and we were getting over a $1.5 million, $2 million or so a year in revenue, then we decided we were getting pigeonholed. We were losing out on RFPs and other projects because we were viewed as traditional PR because of our name. Even though the work that we did was very nontraditional, we were viewed as traditional simply be of our name and our brand.
So that was the less obvious one, because it’s harder to see from the inside when you’re an owner, and do this every day with your own brand, it’s hard to look at yourself and go, “Wow, we need to change. We need to do something.” So we did.
We actually utilized our employees, because they’re very talented and very good at what they do, and helped us re-brand. I came up with the name “On,” and then we added “Advertising” and then we could play with the words, play with the name, play with the logo and whatnot. The employees designed the color palette, the logo, the brand, and everything else. They really took ownership of that, and that was tremendous. Since then, we’ve even grown from there.
The other part of the re-brand strategy was not just a new look, style, feel, logo; it was also relocation. We were in a C building in a suburb of Phoenix, and we decided that in order to make an impact, we have to go with the big boys. That’s why we invested into ourselves and took out another loan and moved into a highrise in downtown Phoenix. Smartest thing we ever did. We almost doubled our business simply from our location because people saw where we were, saw who we are, what we do.
ROB: That’s an interesting part of the story. What sorts of clients did you notice were very ready to jump onboard with you in that new location? Maybe you even met with them before in your old location, and you just couldn’t quite land them.
JOHN: It wasn’t any kind of repurposed potential client like that, where we were able to get somebody after losing them the first time, but we did get signage on a major street here in downtown that gets a lot of traffic all day long, not just rush hour. So that helped.
For example, the Phoenix Police Department needed recruiting, and they literally just walked up to our suite and said, “We need somebody to handle our recruiting.” We did a proposal. They hired us pretty much within – very unheard of. That was a very large deal that really helped us launch our downtown business.
Again, looking at yourself in the mirror, what can you do to make it better? How can we grow? How can we utilize our space and make it even more impactful? We did to ourselves what we do for our clients, and that is boosting our website presence, boosting our Google Analytics, boosting our social media presence. Basically making ourselves a client. As long as we treated ourselves as if we were a client, spent money as if we were a client on ourselves, then we were starting to get more traction.
We got Chompie’s, which is a locally owned restaurant chain here that has five locations, recently bought out by the Freddy’s chain. It’s a really big burger place. Recently bought out, but they kept us onboard because of the strength that we brought to the table for Chompie’s. We got them through our website. Then they came up and visited our office and really appreciated what we’ve done, and they’ve been our clients now for a long time.
ROB: That is a very full picture of marketing. You’re talking about investing the resources internally to make the new brand excellent. You’re talking about, really, with that location, some of it is, simply put, branding. I think it’s easy to overuse or misuse branding, but that visibility and that credibility of being right there and downtown really does help people feel better about coming onboard with you.
I think with that second re-brand, it’s interesting – you’re both moving away from media, which has certain implications, and PR. But that probably also reflected changes you had been making to yourselves that only really came to fruition in the new brand. What are some of the dimensions of PR that you found yourselves evolving in your thinking? Especially coming from 1993. It’s this entire emergence of digital from the first day of websites.
JOHN: That’s absolutely right. And not just working with ourselves and making ourselves better from a brand standpoint, but also embracing the technology that goes along with media marketing. When Ron started in ’93, when I jumped in in 2002, even back then it was still pretty traditional. It was billboards, TV, radio, PR, and support.
Now it’s all-encompassing. An advertising marketing campaign involves literally everything. It’s very rare now to just say, “We’re going to do a billboard campaign.” If you do a billboard campaign, you have to have a call to action. A call to action’s no longer just a phone number. It’s also a website, it’s a social media site as well. There are lots of different ways to draw traffic depending on what the business is and how they want to find their clients.
ROB: Along that evolution, you’ve probably seen a lot of emergent marketing channels that turned out to be a flash in the pan. You’ve probably seen a lot of marketing channels that were right to adopt eventually, but maybe not quite yet when they first came out. How have you disciplined and thought about which practices to get into, which ones to get out of?
JOHN: I think video is a perfect example of that. 15 years ago, video companies or videographers were everywhere, but they shot weddings, things like that most of the time. We were implementing video into marketing before it was hip, before it was cool, because that was our background. That’s what I used to do.
Implementing video into marketing was kind of a new thing, and then putting testimonial videos on your website, putting marketing video on your homepage. Those were things that we implemented a long time ago. They were not new by any means, but they were certainly – not as many people were doing that in-house. We could produce something in-house.
If you hired another advertising or marketing or PR firm to do that for you, they’d probably charge you another $10,000-$15,000 on top of your retainer to get that done. We were able to do that in-house for the same price. That was kind of our niche.
But implementing video back then was totally different than it is now. There are still the video testimonials, there are still the marketing videos that you have for websites and your homepage and stuff. However, they’re shorter, they’re quicker. Now they’re cross-platform between your website, your social media campaign, potentially even your online advertising through Facebook video advertising or other social media video advertising. The implementation of video is very big.
So, we went from me with a camera and a small desktop editing system to now we’ve got a video department with an 1100 sq. ft. studio that has green screen and lighting. Whether we do product shoots or commercials or whatever we’re doing, we can do that. Again, we do that in-house. We just hired a video guy several months ago, and he’s fantastic. Very creative and does some amazing things.
ROB: There are so many firms that are still doing old school video, that are still doing old school PR without much thought for measurement and, I think through not too much fault of their own, challenges around transparency. How have you reflected on these changes and been able to adjust strategy at these moments in time?
JOHN: I think video, again, is probably the biggest growth component we have in our agency when it comes to what type and what strategies we develop. As we get a new client and we do a creative brief on them or we decide how we’re going to work with them, what strategies they need to be successful, a lot of times there is a video component. Most of the time there’s a video component. But then how do we strategize? What do we do with it?
The way that we’re operating is we’ve got a senior strategist who works on that strategy for the client. Then he’ll bring in the video person, social media department, whatever is necessary to make that successful.
Again, making video a key component of that strategy, it’s not traditional anymore. Like I said, even if you shoot a 45-second introduction video, you want to break that into 6, 12 second snippets that you can run on social media. You can put that on Instagram, you can put that on these platforms that work depending on what the client’s strategy is.
Our social media department is phenomenal. They’ve got their hands on – they speak a language that I just go blep – I have no idea what they’re saying. [laughs] What they’re doing and the way that they run their analytics and the way their strategies are developed are amazing, and they’re successful. Without that component that they use the video – and I don’t know exactly how that works, but they do, and they do a phenomenal job of it – they work in the video within the social media and the marketing strategy. It’s all-encompassing, and without video, you can’t get it done.
ROB: I love that you are willing to dive into admitting some of the stuff that you don’t know. Also, something I’ve heard in this conversation that we don’t normally hear: you’ve mentioned twice, at two different points in the business, that you took an SBA loan. Do you think that’s something that agencies do, and just don’t talk about? Or do you think there’s a reason that felt like the right thing for On Advertising that maybe other people weren’t aware of or thought wasn’t right for them?
JOHN: I think having a good financial strategy behind you and getting people behind you who can help you with that – we’re media people. We’re marketing people. We’re not financial people.
Getting the right people behind us to help us – good CPA, good attorneys, those types of people to help you create those plans – makes sure that you strategize to get through the tough points. We survived the recession. Not easily, but we did, because we learned how to develop different revenue streams. When one was failing, we could lean on another, work another one harder than the other if it was working at that time.
But as far as taking a loan, when we took the first loan, it was to start the business. For me to quit television and get into the business, we had to have a payroll. We didn’t have any income, so we had to develop that income through a loan, with a payback strategy. Took us 3 months to get our first client, but then they started coming regularly. We made our payments on time. We got that loan paid off in I think 10 months.
The second time we took a loan was a revolving credit, which we still have, which is nice because we use it when we need to, we pay it back as necessary. That’s just a really helpful strategy to keep our cash flow going.
ROB: That’s probably a good tip, too. A lot of people have shared with me their different experiences in the banking world. When you mention a line of credit, I imagine – are you working with some sort of more local bank that you have a relationship with? Do you work with a bigger bank where it’s just some forms you fill out? What does that look like?
JOHN: For us, we have a local bank that we have a relationship with that we keep our accounts in. Being an advertising agency, we have encumbered accounts versus cash accounts and so forth. So we have to work those around and strategically keep those where they’re healthy yet they’re also viable for our clients and for ourselves.
Then for our line of credit, we actually went to a national third party that does business loans and got a decent rate with them. As the relationship built, the rates got better, the loan terms got better. It started off as a necessity, and now it’s there when we need it.
ROB: Right, a necessity because sometimes you need to do work ahead of delivery for clients and invoicing. Sometimes clients are a little slow on the pay. [laughs] Is that the . . . ?
JOHN: Right, definitely. Especially those kinds of clients. The slow pay clients are the worst, but you’ve got to live with them sometimes. [laughs] And that’s what those credit lines help you get through, those little tough times. Even if it’s just a small thing, like paying off an electric bill or something like that that you need to do. But also, it got us through payroll a couple times when it was thin back in the day. The revolving line was always helpful through those periods.
So yeah, we’ve had to utilize that. We’re now in a position where it’s just a good safety cushion. We can use it for various strategies again if we decide to purchase another company or merge with another company or things like that and we want to keep our cash flow intact. We can lean on our line if we have to.
ROB: It’s really interesting; it sounds like you have been, at least more than most guests we’ve talked to, much more willing to build a community of complementary businesses around you. I think you mentioned some legal, you’re talking about the finance and banking side. I think you even implied that people were helping you think about how to financially run the business responsibly.
It’s just an interesting group of advisors that I think a lot of agency owners feel like they need to go it a little bit on their own, or that we live in a world where people don’t really want to help you personally. I’ve heard such different things from business owners who work with local banks and have much more human partners around their business.
JOHN: I think, too, in our business – and I would say in advertising/marketing, but obviously, again, we come from the media background, so we also understand the power of ego and how it can help you and it can also destroy you. You have to be able to control it.
If you let your ego or your pride overtake your ability to run the business – you have to remember, the business is bigger than you, no matter if it’s one person or three people, like we have now. The business is bigger than us. Whatever decision we make that’s based on personal reasons, we have to really look hard and make sure it’s not going to damage the business, because if it damages the business, it’s not only damaging us as partners, but we have 17 employees to worry about. It damages them. They have houses and cars and families and things like that. We have a lot of responsibility.
So we can’t make decisions based on our ego and how we feel in the morning. It has to be based on, “How does it affect the business?” If it’s bringing on partners in banking, financial, whatever it is, we’ve got a team of advisors that we can call and say, “Hey, I’m dealing with this. What do you think?” Just get some feedback on things.
You can never have enough people to discuss things with. Ultimately you make the decision, but it’s nice to get some other opinions as well.
ROB: Absolutely. It’s a lot of responsibility. John, you’ve mentioned some things already, but what are some other things you’ve learned while building On Advertising that you might do differently if you were starting clean?
JOHN: Oh, gosh. We made some mistakes along the way, absolutely, but at the same time, I don’t think we’d be where we are if we didn’t make those mistakes. You have to not be afraid of making mistakes, because that’s part of learning. It’s part of growing. If we got here on a perfect time and we had perfection all the way behind us, we did everything the right way all the time, I think you set yourself up for disaster, because one small thing at this point can destroy the whole thing that we built.
If it’s something small – it’s kind of like when I was in television, I worked in small markets. I learned the business, and I ended up going to network. If I just went straight to the network and I made the same mistakes I made in Grand Junction, Colorado, I would’ve gotten fired pretty quickly. So, you have to learn and make those mistakes along the way and not be afraid.
Even now, we’re not afraid to make mistakes. We just are able to calculate them a little bit better to make sure that if it is a mistake, it’s not going to harm the business.
ROB: One of the challenges of making mistakes as a leader, I think, is also not being the only one who’s allowed to make mistakes. How do you communicate to your team and give them some freedom to learn and to fail well and to grow the business through those mistakes?
JOHN: The great thing about having multiple partners is, first of all, we communicate really well. Ron and I have been partners since 2002. Eric is our CEO, the third partner who came on a couple years ago, as I mentioned. The great thing is we communicate really well. We all have very distinct areas that we work in.
Within that area, we also have – the employees are not really sectioned off. We have a creative team that Eric leads, we have the marketing team that Ron leads, I look at more of the 50,000 foot level, run the business, take care of the ARs and APs. So yes, it’s okay if our employees make a mistake here and there, as long as it doesn’t cost us a client.
But what we also do with them is we try to start from the very beginning. When they start with us, we get them on their feet, we make sure that everything’s good. If they’re in the position where they work directly with clients, they learn how that works. They get into the processes and so forth and then they go forward.
After that, we want to sit down and talk with each individual employee and find out what their career track is. What do you want to do? We don’t expect our employees to be with us for 10-15 years, but while they’re here with us, we want to help them grow personally and professionally, and whatever they do is what they do. Hopefully they stay with us; they may not.
We work with a PEO that has a tremendous library of classes and online courses that the employees can take to help their career track, and they’ll help us create a curriculum around what career track that employee decides to do. That’s been very helpful in obtaining and retaining our employees, and hopefully, when they make those mistakes, they won’t be as harsh as if they didn’t have that training.
ROB: I haven’t seen that sort of benefit from a PEO before. Who’s doing that?
ROB: Okay, I know Insperity. I know TriNet, Justworks. That’s probably a whole other rabbit trail we could go on of some of the benefits of that, particularly – way down in the weeds, you’re probably an LLC, and even when you get to withholding payroll and taxes, there’s some PEO benefits. It’s meat and potatoes small business stuff, but it’s hard to talk about.
JOHN: Yeah, that’s a really good topic, utilizing a good PEO in the manner that they need to be used. They’re there to help you with liability, obviously benefits, that sort of thing. But the ancillary benefits that Insperity offers, as well as making sure that our liabilities are covered and we’re very compliant across the board as a small business, we have to watch that.
We don’t have HR people. We don’t have payroll people. We don’t have people who know those things and how those things work. If we have an issue with an employee and we need to make corrective action, we call them. It’s ultimately their employee, of course, but we’re in charge of them.
But it’s nice to have that safety net. It’s nice to have that person to give a call to.
ROB: This falls right back into that theme we were in before, where you have surrounded yourself with an excellent web of advisors who know what they’re good at so you don’t have to know how to be good at that anywhere within the organization.
JOHN: Having trustworthy team members on the outside is just as important as having good employees.
ROB: Absolutely. John, what are you excited about that is coming up for On Advertising, and possibly even for the broader marketing and agency world?
JOHN: There’s a lot to be excited about. There’s a lot to be excited about in the area of the technology that’s coming on, with the way that social media and video are working together, the way that we can develop strategies that are cost-effective and also have a lot of different arms and ways of communicating with the audience, whether the audience is mostly social media people or if they’re TV people. Whatever their medium is that they like to interact with, we can create programs specifically for that, or across the board. That’s really fun because there’s a lot of creativity involved in that.
The other exciting thing, too, is when Eric came aboard as a third partner, he’s also an artist, and one of the things he does is structural art. He does big municipal structures and statutes and things like that. We’re building that as another arm of the company that he can design it, and then On Advertising comes behind him and does the marketing and social media campaigns around that art piece.
He’s already done one in Tulsa and he’s done some stuff in New Mexico. Phoenix is a very burgeoning city. As a lot of people know, very fast-growing. There’s a lot of stuff going on here with high-rises and major apartment complexes in downtown and around Scottsdale and around the city as a whole, and we’re going to have a part of that. To be part of that is very exciting.
I’m excited about growth. We’ve got two growth strategies. One’s organic through building business. The other one is mergers and acquisition. About 3 years ago, we merged with another company, Eric’s company, and we’re looking for other things to move into. Anything that’s complementary to what we do, whether it’s another marketing firm or whether it’s a PR firm or whether it’s a video company or a social media company.
However that works into it, if the numbers work right and the people work right – mostly culture, which is more important to us than numbers. If the culture fits our culture and we can make a meld best, then we will do that.
ROB: It’s fascinating what you say about the physical, this construction and art and public art. It seems like simply by staying in the game, but also keeping your skills current, you’re finding that old things are new again. Art – I think even feeds into all sorts of experiential marketing that goes on now. There are some very large agencies being built in experiential.
With video, I would imagine on one level it’s video ads, and it’s been YouTube, but you’re probably even seeing stuff, new ad formats, but using video. Are you seeing much in, let’s say, digital television insertions and additional opportunities like that that may take you all the way back to the TV days?
JOHN: It’s funny, because I don’t know a lot – since I’ve been away from TV for so long, that’s all changed. Obviously, I still have friends in the business and we still keep in contact as we buy TV, but yeah, it’s different. Cable, satellite, now streaming. You can get very specific. If you have a target market that has a certain income range or a certain family dynamic, you can target almost the household. You can target streets, you can target zip codes. You can get very close on who you’re targeting.
Those Facebook ads and those Instagram ads don’t pop up on accident. There are things that you indicate. Whenever you do something on your phone or your computer, you’re indicating what demographic you are. You’re telling marketers, telling us, the subscriptions that we go to, you’re telling them, “This is what I do. This is who I am. This is how much I make. This is what I like.”
Then we can look at that data and say, “Okay, we’re going to pinpoint that product over here. We’re going to do this service over there.” It’s very helpful. It’s a different way of marketing. It’s just going to grow and be even more so. We’ve already seen how we are all inundated with advertising and marketing, and it’s going to get more and more, I think, in different ways.
ROB: Absolutely. John, when people want to find On Advertising physically, it sounds like they should go to downtown Phoenix. When they want to find you online, where should they look to find you and On Advertising?
JOHN: We’re at onadvertising.com. It has all our services and a lot of things that we’ve done, and it has bios on all of our people. Again, we really looked at ourselves, and our website’s a constant evolution that we’re working on all the time. We’ll change it four, five, six times a year.
ROB: Very good. John, thank you so much for coming on the podcast. Congratulations on the growth, on evolving and staying relevant and being transparent with us on how you lean on other wise people to grow your business.
JOHN: Thank you very much.
ROB: Be well. Thanks.
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