Most accounting firms embrace the message that marketing matters by creating a marketing and PR department to promote themselves.
Armanino McKenna isn't like most accounting firms.
It embraced marketing by creating a marketing and PR agency to promote clients like Hewlett Packard, Jamba Juice and Kaiser Permanente, as well as itself. The California-based Top 100 Firm's experiment in marketing, a division called AMF Media Group, has grown more than fivefold since it was created in 2008, and proved that accounting firms can be very successful at marketing -- provided they have the right partner.
In this case, the right partner was Vintage Foster.
THE ENTREPRENEUR'S FRIEND
Foster doesn't have the standard bio of a CPA firm partner. In fact, he spent most of his career in journalism, ending up a few years ago as publisher and chief executive of the San Jose/Silicon Valley Business Journal. It was there that he began to perceive a market opportunity.
"In the mid-tier market, people didn't want to work with a multitude of vendors -- they wanted a one-stop solution," he said. "But for that, they'd have to move up to large national firms. If we could build that at a regional level, we could get a lot of market share."
As the idea matured, Foster shared it with a CPA he knew -- Armanino McKenna managing partner Andy Armanino.
"I'd like to say we really strategized and figured out that this was a way to serve the mid-market need, but it didn't happen that way," said Armanino -- though he did recognize the opportunity when it came his way. "Vintage was thinking of leaving his newspaper role and starting this business, and we went to my whiteboard and started working on costs. And I said, 'Let's do it here.' Usually we identify a client need and go find a winner. In this instance, we found a winner, and went out to make sure our middle-market clients had a need -- which they did."
And with that, AMF Media Group was born.
In short order, the group grew from a staff of three to its current staff of 17, and a strong position in the market. "There's probably no PR/marketing firm in the world that gets more scrutiny in terms of measurement than AMF," said Armanino. "We've been really clear and set the plans each year in terms of dollars -- and we're proud to say we've beat that plan every year."
"The majority of boutique firms do not have the comprehensive makeup that AMF has," explained Foster. "The average boutique firm will have [outside] partners for event management, partners for Web development, and so on." AMF, on the other hand, is able to offer a full range of marketing and public relations services internally, from Web site development and internal communications, to branding strategies, event management, and social media services.
It has also built a strong reputation for both internal communications and handling crises. "A lot of PR firms do not engage in crisis communications," Foster said. "One false move can put your client and your entire business at risk. We are a big-time player in crisis communications in California." His 20 years as a journalist certainly helped prepare him for a recent crisis: When Occupy Oakland protester Scott Olsen was hit by a projectile and brought to AMF client Alameda County Medical Center's Highland Hospital, Foster acted as the hospital's spokesman and helped negotiate with Olsen's angry fellow protesters to prevent a march on the hospital.
In addition to a major client base in health care, "We have a strong practice in technology, where we find synergies with the audit and accounting side" of Armanino McKenna, he said, before going on to point out that AMF has a strong nonprofit area, which is the accounting firm's second largest niche overall.
"We're starting to see some real success" in cross-selling, said Foster, who recalled being taken on a sales call two weeks before he had even started with the firm. That cross-selling goes in both directions: "They've brought me in to some opportunities, and I've brought them into some opportunities."
Both Armanino and Foster reported discovering synergies where they hadn't expected them. While the accounting side usually targets the chief financial officer and the marketing side usually targets the chief marketing officer, services like internal communications are often under the remit of the CFO, while the firm's tech side, which has a CRM practice, wants to reach the CMO -- so their audiences often overlap.
The benefits of the relationship between the accounting firm and the marketing agency aren't limited to cross-selling opportunities, though.
FLATSCREENS AND FINANCE EXPERTS
"When we first introduced the idea to the partnership, they thought we were crazy," Armanino said. "But it didn't take long to show the business sense, and the business model."
The most obvious benefit for the firm, of course, comes in having its own full-fledged marketing agency. "We're getting a unique expertise in-house that we'd never have," Armanino explained. "The better we get at marketing the industry, the better off the industry is. AMF sits with us in our office, sees our day-to-day interactions, so Vintage and his team understand accounting like no other group."
Foster and his team have gotten Armanino McKenna notice in The Wall Street Journal, on the radio, and on TV -- "You don't find a lot of accounting firms on the local TV station," he noted -- and he believes that the work has more than paid off: "Armanino McKenna was successful before AMF was on the scene, but in a down economy, Armanino McKenna outperformed 90 percent of accounting firms, and I would say AMF had a lot to do with that. If you look at the work AMF did over the past few years, and you look at the success of Armanino McKenna, pound for pound we have outperformed other accounting firms, both in terms of PR and marketing and financially."
On the other side, being part of Armanino McKenna is a clear plus for AMF, not least in terms of the stability the larger structure offers. "When we're recruiting, it's actually an advantage," said Foster. "Other firms are laying off and we can't hire fast enough. The stability of the industry and model is strengthened by attachment to a larger firm. We can weather storms because we have the expertise on the fiscal management side of an Armanino McKenna. It's helped us recruit some top talent. They're not worried about whether a three-and-a-half-year-old firm can continue."
The accounting firm's partnership model is another benefit. "In terms of motivating AMF employees, as we grow, there's going to be room before long for another partner," Armanino said. "It's actually better for employees, as they have a road to ownership and partnership."
It's also nice to have instant access to some very sharp accountants: "The other thing that makes us unique is that I have the ability to walk down the hall and get the kind of fiscal coaching and management" that comes from being associated with a Top 100 Firm, Foster said. "We have the strongest fiscal analysis of any boutique firm in America. That is not traditionally a strength for this kind of firm."
"I thought I was smart on numbers beforehand," he added, "but I found out I wasn't very smart when I started working around these guys."
As one might imagine, cultural issues can arise between the accountants and the "creative" types at AMF -- but often, they work out for the best.
"It looks very different in AMF than in the accounting firm," Armanino noted with a laugh. "Their walls are painted all different colors, and they have flatscreen TVs everywhere. The accounting firm side is a little more drab in its colors."
Foster pointed out, though, that all those flatscreen TVs can be very attractive during the March Madness college basketball tournament: "Our side is the accounting firm's favorite place to be in March."
In the end, Armanino warned that all these mutual advantages wouldn't accrue to just any firm. "I don't think this is something that would naturally be replicated in other firms," he said. "We identified this as a good opportunity because Armanino McKenna has been very aggressive in our own PR and marketing efforts, so we value marketing and PR. A traditional firm that didn't value them would never do this."
SELLING TO ACCOUNTANTS
That means those traditional firms will need to hire a PR and marketing agency of their own -- and they may get the chance to hire AMF in the future.
"Originally, I told Vintage I didn't want him working for any other accounting firms," Armanino said. "But we've recognized that if we have AMF work with a firm in Texas or New York or Florida, we're comfortable sharing the knowledge that we've gained to date." He said that the firm is part of the Moore Stephens network, which has 33 very large firms in the U.S. "So that's a logical place to start."
"There's no reason for us to be just a California firm. We'd like to build a national reputation," said Foster. With the experience and expertise AMF has accumulated, "We're ready to take the show on the road. We envision AMF would be hired by a Florida firm or an Ohio firm or a Missouri firm to replicate the success we've had here." He noted that the group already has a small finance company in Georgia as a client, and is looking to pick up a company in Dallas. "We've confirmed that a boutique firm that's a one-stop shop can succeed."
The proof of that success isn't just in AMF's growth rate -- though that is impressive. "Right now, AMF is the fastest-growing division of the firm, and has been the last couple of years," Armanino said. "I envision AMF being a large part of our firm's growth. We're anticipating AMF will outpace the growth of the accounting practice by a wide margin."
Foster is on board with that goal. "I look forward to sitting across from the department chairs of audit, tax and consulting, and being, if not larger, at least the same size. That will take some doing, because they're pretty substantial, but I think we can do that."
He's also hoping to continue growing his staff, which he predicts will have almost doubled to 30 people within a year, and that brings up another goal: "I want to be a pain in Andy's side about office space -- we've outgrown our space."
Bold plans for the future are a clear sign that Armanino McKenna's experiment in marketing is working -- and not just due to the fact that the firm has embraced marketing as a practice.
Marketing has embraced Armanino McKenna, too.
"When you have a division that operates in a fundamentally different way than the firm, I've been asked why I don't just pick up and move," Foster said. "I'm here because I love working with Armanino McKenna -- I run my business better because I'm part of Armanino McKenna, and I get to walk down the hall [to consult with them]. We'd be successful on our own, but we would not be as successful -- no, we would not."
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