Martin Andelman, Bio & Backgrounder
IN CASE YOU’RE INTERESTED…
At 50 years old, and having originally founded my firm back in 1989, it’s been some time since I’ve been asked for a resume, as one might imagine. So, it’s also about time to commemorate what’s gone on over the last twenty years, and I have to tell anyone reading this, it’s gone by in a flash.
I started my firm in 1989, back then it was called The Marketing Workshop, and it was to be a marketing communications agency that would use the disciplines of direct marketing, disciplines that had only recently emerged along with the advent of the personal computer… the Macintosh had only been on the market for four years, and DOS was… well, DOS.
Prior to the Mac, it wouldn’t have been possible to start an agency like the one I envisioned back then. I had worked at midsize and larger agencies prior to starting my own firm, and they had millions invested in equipment that was used by the various “creatives” to create the artwork that would become the print, television, mail packages, and radio ads that the clients depended on to drive their sales and build their brands. With the Mac, you still needed education, talent and experience to be great, but the cost to create went way down.
The idea of The Marketing Workshop was that it would be a “workshop,” a place where clients could come in and work directly with their creative team, as opposed to the “closed door” agencies that would never think of letting clients interact directly with creative types. It would also be a place that would build campaigns that would elicit a direct response, as opposed to merely increasing awareness, as was the norm for ad agencies of the day.
Direct response, back then, was the ugly step-child to the general advertising world. They made ads that increased awareness, while direct marketers slapped 800 numbers all over everything, and asked that people respond directly to the message they saw. How crass, was the thinking at the time. It’s funny, but then ad spending was 90% general advertising, and 10% direct marketing. Today, it’s completely reversed itself, and I’d be surprised if it wasn’t 99% direct and 1% general advertising. Few companies today want to spend money advertising without eliciting a response of some kind.
In 1989, I was one of the early innovators, in the sense that I didn’t see why the two advertising disciplines had to be mutually exclusive. Why couldn’t a given ad build image and awareness AND elicit a direct response? Why could ads always do both? That’s what clients wanted ads to do, of that there was little question.
What made me different, I knew from my experience at general and direct response advertising agencies, was that I was two things too. I was considered a very creative writer and strategic thinker, but I was also an economics major with a background in finance and accounting, who could understand the business case behind each client’s needs and objectives. I had worked as an account executive and as a copywriter, and I was equally comfortable in either role… and there certainly weren’t a lot of people who would say that.
The final differentiator that I planned to take advantage of when I started The Marketing Workshop was that my agency would have a deep bench in terms of technical and industry knowledge. I had been working in the health care communications area, and no one knew more than I did about how to communicate and market various health care related initiatives. From HMOs to PPOs… from the Point of Sale products to the Medicare-risk models, I made sure that I and everyone that worked for me, would know more about our client’s businesses than they did.
So, The Marketing Workshop was born in November of 1989, and it was just as I had envisioned it. We were a highly creative, direct response agency staffed by people with expertise and knowledge in health care marketing that was essentially unrivaled by any of our competitors. And we didn’t need a layer of account executive suits stopping clients from working with their creative team… we were a true “workshop,” and we would win because we were smarter and worked harder.
And it worked… very well. In fact, it was so well received that we finished our first year with $1.6 million in gross sales, and went into year two looking to double our size, which we also did a year later. Our first health care client was FHP Health Care, a company that in part due to our work, grew from being a small regional player to being the largest or second largest managed care organizations in the country.
That kind of visibility and success drove other health care organizations directly into our now very capable hands, and in part because we required no training curve, and because the campaigns we were creating were working, we started to build a client list of some of the largest health care and insurance companies in the country. Kaiser Pernanente, Blue Shield, Blue Cross, Group Health Cooperative of Puget Sound, Pridential, New York Life, and many others. We also started attracting ancillary health care companies, like hospitals, and then physician groups, which were then forming as IPAs, Independent Physician Associations, so that the doctors could negotiate more collectively.
Four years into The Marketing Workshop, we were doing something like $8 million in gross annual billings, and we had 72 employees at our peak, I believe. We now had clients that went beyond health care, to things like retail sales… Warner Bros. had engaged our firm to help with the opening of the Warner Bros. Studio Stores, that would soon be found in malls over the globe.
Back to School…
I had gone back to graduate school during those years, getting my MBA at Pepperdine University’s prestigious Presidential/Key Executive program, and then completing a second masters program at the University of Misourri at Kansas City’s Block School of Business, which was focused on direct marketing and market research. It was a highly specialized program that had started at Oxford University in England and then had come to Harvard, before being funded by H&R Block, and brought to UMKC.
Kansas City is a Mecca for direct marketers, with such organizations as Sprint, Hallmark, H&R Block, Cerner Corporation, Waddell & Reed, Dairy Farmers of America, AMC Entertainment, and numerous others, to say nothing of the Chicago and St. Louis headquartered companies that were a hop, skip and a jump away, including Sears, which at that time was still the largest cataloguer in the world. The faculty was what drove me to attend the program, and I’m proud and fortunate to say that I took classes from Bob Stone, of Stone and Adler fame, and learned everything he was willing to teach and then some. I even danced cheek to cheek with him at graduation, and can probably still find the photos to prove it, if challenged to do so.
Bob Stone in one of the founders of direct marketing as we know it today. His work spans four decades. His book, Successful Direct Marketing Methods, in its sixth edition with over 150,000 copies in print, is considered the definitive work in the field. He is a senior Fellow at the International Society for Strategic Marketing, and a member of the Direct Marketing Hall of Fame in New York City.
He’s won countless awards, including two gold Echo Awards, and the John Caples Award for Copy Excellence. He’s also the former Director of the Direct Marketing Association and the former President of the Chicago Direct Marketing Association. He teaches at Northwestern and at UMKC’s Block School of Business, and has lectured all over the world.
Other members of the faculty included Martin Baier, who is regarded as one of the fifty leading direct marketing thinkers, practitioners, and educators of the past hundred years. He is Founder of the Center for Direct Marketing Education and Research at the University of Missouri at Kansas City and currently is Adjunct Professor in The College of Business at James Madison University.
And I was fortunate to have Joan Throckmortin as my creative and strategic copywriting professor. Joan assed away a few years ago at the age of 71, but she was one of the greatest direct marketing copywriters in this history of advertising. Throughout her career she worked for Doubleday, American Heritage, and Time Inc., where she launched many of the product lines that are household names today, including Sports Illustrated, and the Life Picture Cookbooks. At Time Inc. she was the assistant to the Chairman of the Board. Business Week named Joan as one of the “Top 100 Corporate Women in America.”
It was an education made exponentially more powerful by being able to apply what I was learning to real life situations as my agency was now the 8th largest in Southern California, with a client roster made up of many on the Fortune 500. Upon graduation from UMKC, I now not only had one of the most successful direct marketing and strategic communication firms in Southern California, but I also had learned about marketing and market research from the undisputed best the world had to offer. I was not yet 35 years old, and the only thing I hadn’t yet done was fail.
The Marketing Workshop ended in 1995 when a partner turned out to be less than honorable. I fought it in the courts for eight months before making the decision to do what we should have done in Viet Nam… I declared myself a winner and quit. Those eight months fighting an unscrupulous ex-partner were miserable at the time, but I would soon come to view them as an education in business litigation that one couldn’t hope to get in four years at Harvard Law. The day I stopped fighting, I started the firm that would ultimately become The 4th Floor.
Ice, Ice Baby…
I decided to start my new company in an abandoned ice house, the second largest and the oldest ice house in California. Originally built in 1902, it had been abandoned for many years and was literally on the wrong side of the tracks… sitting along side the railroad line in Fullerton, California where it once was used to load ice onto the railroad cars that were taking oranges and walnuts all over the United States from the groves of Orange County.
I spent well over a million and a half dollars refurbishing the ice house, transforming it into one of the most dramatic ad agency working environments anywhere. It was featured in How Magazine, a magazine devoted to excellence in design. In our conference room, everything was suspended in mid air, including the bright yellow roman columns, and a bright red British phone booth, complete with functioning telephone. The conference room had windows and a dramatic archway, also painted bright red, but it had no walls.
In the middle of The Big Room, we had a badminton court, a game I still love today, although I don’t play nearly often enough. As far as creativity went, we were the cat’s meow. Clients would come to tour our facility, and marvel at where we worked each day.
I started a program for corporate executives called Creative College, and we taught teams of executives how to think and plan strategically and creatively. We also became the Home of the Corporate Blusical, and wrote Songs in the Key of Business for some of the largest corporations in the world who hired us to create transformational communications campaigns that were responsible for monumental changes in internal cultures and external marketing programs.
We stayed in the ice house for two and one half years, which was long enough for me to lose two and one half million dollars. It’s not that we were not successful in terms of the work we were doing, but there were several forces at play, and as I’ve said many times since then… you learn a lot more on the way down then you do on the way up.
For one thing, our base expertise in health care communications, that had fueled our growth since 1989, wasn’t producing the results it always had, and I learned from that experience that you have to look as carefully at external market forces as you do at your internal competencies. The heath care industry was growing, sort of, but it had reached the point where the industry leaders would look to grow through acquisition, as opposed to organically. We did catch on after the first year in operation, and landed several high profile clients, including Safeguard Dental Health Plans, Blue Cross of Ohio and Indiana, and even American Honda Motor Company.
We worked on strategic communications for Safeguard and successfully helped the company transform itself from a fixed cost heavy, staff model dental HMO, to a lean and profitable marketer of managed care dental management services. Working with attorneys from Gibson, Dunn & Crutcher, and accountants from Deloitte, we created both the consumer brand and direct marketing campaigns, and the investor relations initiatives. The company’s stock price went from $11 a share when we took over the account, to $22 a share when it was sold to John Hancock a year and a half later.
The ice house was a labor of love, but a costly one, and at a certain point you just don’t love what is bleeding you dry every day in terms of expenses. A 1902 ice house is like a drug habit, you have to feed it every day, and it never goes away. Having lost enough money on a facility that clients thought was cool, but not cool enough to pay a premium for, I made the decision to cut my losses and we moved onto the fourth floor of the Chapman Building, a beautiful 1922 bank building just a mile or so away from the ice house.
As office buildings go, the Chapman Building had character, and you could open the windows, which we all thought was quite important because we liked to hang around after work on occasion drinking Sidecars, which I explained to my staff, was the only civilized way to drink cognac in extreme heat… and smoking fine cigars.
It was the beginning of the dot-com craze of the latter half of the 1990s, and nothing made sense anymore. As a strategist, I found myself so out of step with what was going on in business that I wasn’t sure my education would ever pay off. It was to be a “new economy,” in which profits didn’t matter, only the monetization of eyeballs was to be the goal.
It was a bunch of crap that never made a lick of sense, and I was writing papers forecasting the popping of the bubble in 1998, while most everyone else was still reading Fast Company and looking for shares in the next nonsensical IPO… which by the way, as I tried in vain to tell countless others, stands for “It’s probably overpriced”.
When the bubble popped it was April 10, 2000. I remember it like it was yesterday because I was at San Jose airport, of all places, ground zero for the popping of the tech bubble. I was boarding a plane to come home from meetings at our client Satellite Health Services, a company we had helped to strategically diversify from being a leading dialysis provider, into a group of companies that included a laboratory division, and a capital division, that invested in emerging medical technologies.
After the bubble popped, most companies were wrecked in one way or another, but we came through unscathed, in fact stronger than ever. Most of my team had now been with me for going on a decade, and we were capable of doing more and better work than any firm in our field. We now had clients that included Bain & Company, Arthur J. Gallagher, AXA Equitable, Kaiser Permanente, among others I can’t recall off hand. We were in a way happy that the bubble had popped and fundamental principles of economics were again important in business.
In 2000, I wrote a paper titled: How Digital Technology Has Changed the Face and Increased the Power of Mass Communications, and it was to transform the medium of communications with which we would work.
The paper explained that hundreds of years ago there had been media kings with names like King Henry and King George. They had thought that they derived their power from their armies and their money, but they would soon learn that their real power came from their control of the media, which at that time meant sending men around on horseback to read a proclamation to those assembled in the town square.
Then a man named Guttenberg invented the printing press, and it put the power of mass communication in the hands of the common man. Years later a man named Thomas Paine would write a pamphlet titled “Common Sense” and one revolution after another would take place as a result, first here in the colonies, and later in France. Another hundred years later a man named Karl Marx would write The Communist Manifesto, and yet another revolution would bring an end to monarchies as the most common form of government on this planet.
Then we would see technology leap ahead once again with the invention of radio and then television, and after the Presidential debates of 1960, television would be the medium that could win or lose the White House. But television was expensive, and over the last thirty years, we’ve seen the creation of a new group of media kings, but now their names were Rupert Murdoch, Sumner Redstone and Barry Diller, to name but a few.
The key point of my paper was that now the Internet and digital video technology would combine to put the power of television into the hands of the common man, and the effect would be no less dramatic that what was made possible by the printing press four hundred and some odd years ago. It would, my paper explained, change the way the President of the United States was elected. No longer would money necessarily have to come from the established sources, and no longer would control of the airwaves control the outcome of a presidential campaign.
My paper of the year 2000 wouldn’t come true until years later in 2008 when an unknown African American by the name of Barack Obama would harness the power of digital technology and the Internet to become the 44th President of the United States.
What my paper concluded, however, had profound implications to The 4th Floor in the year 2000, however, because it meant that we could now afford to have our own television production center, and what we produced could be distributed, if not via broadcast television, then at least streaming on the World Wide Web, or on DVD, which stands for Digital Versatile Disk, few people realize.
We invested in the technology and went out to win our first client that would understand the power of being able to produce what you might otherwise see on television, but produce it at a fraction of the cost.
Just like the Mac had done years before, we could now use it along with new compression technologies to create movies and video programming that could influence at a whole new level, and at a cost never before contemplated. Truth be told, if one had the talent, the knowledge and the experience, you could now create a major motion picture or a broadcast quality television program in a studio and with equipment that was one tenth of what it had cost in past years.
We were already expert and experienced in working in any medium, including video, having produced award winning television commercials years before, and now we would have greater control and be able to offer the medium as a means to achieving objectives that would have never afforded the medium before.
Our first client was Kaiser Permanente, and our challenge was to produce a program that would attract a segment of the audience to Kaiser Permanente that had never even considered Kaiser Permanente in the past. It was a difficult objective, we realized, but we were thrilled by the challenge and confident that we would succeed… and we did, eventually. The project was plagued from the very first day by two unseen forces. For one thing, the new technologies were buggy and didn’t always do what they promised to do on the box, as it were. And for another, the change over from analog to digital was painful for the industry. People that had millions invested in technology that would soon be outdayed were being challenged by lower cost start-ups and they didn’t like it one bit.
We had a $300,000 budget and should have had a 33% gross margin, but when all was said and done, we lost money… a lot of money. And we delivered the final project late, four months late. The only redeeming factor was that the end project was exceptional work and the program achieved its difficult objective. In fact, when the 29 minute program was premiered in front of 500 physicians at a conference in Dana Point, California, it received a standing ovation. I remember all I could do was wave at the crowd in appreciation… I had tears in my eyes and couldn’t have said a word.
That was late June of 2001, and after losing roughly $250,000, I did what entrepreneurs do on occasion after a long and hard march to financial failure, I went home to bed and didn’t get out of my bathrobe for weeks. Luckily for me, I bounce well, but when I was finally ready to shave again, I didn’t go straight back to the office. I went to visit video production facilities throughout Southern California, and I went to learn all I could about the new technologies. I needed to learn to edit with the new tools so I wouldn’t be at the mercy of market forces beyond my control.
I wrote numerous white papers that I sent out to CEOs all over the country. I repositioned my firm and developed new collateral materials to carry the new message. I was ready to launch but decided first I would take my family on a summer vacation. We returned ready to conquer new horizons… it was late in August. 2001.
I remember our home phone ringing at six o’clock in the morning. It was a close friend of mine and he sounded frantic. “We’re being attacked,” he stammered, “turn on CNN!” I grabbed for the remote and clicked the television on… Oh my God.
Our daughter was five, she had school and her teacher had said to go ahead and bring the kids in. They would keep them distracted. They were too young to understand what was happening… hell, I remember thinking that I was too young to understand what was happening.
Our economy was already suffering from the recession caused by the bubble having popped in April of 2000, and now this. I’ve always felt a little guilty that my first thought upon seeing the first tower fall was that this would mean a delay in launching my company’s new strategy… we had lost a lot on our last project and this just wasn’t was needed at all.
Of course, that only lasted for a moment and my wife and I never left the bedroom television set for the rest of the day. It was horrific and no one will ever forget what they saw on that day, in part because we saw it played over and over and over. The people jumping from the top of the World Trade Center with their arms crossed or holding hands was frankly too much to bear.
The next eight or so months were terrible for my firm, but we weren’t alone. We got by somehow, I really don’t know exactly how, but we did. We took on clients that we shouldn’t have and ended up giving away hundreds of thousands of dollars in work for a fraction of its true cost. But we made it, and maybe eight months later we got a call from the CEO of a company that was a large financial services firm. He had read one of the white papers that I had written and sent out months before. In fact, the company was the number one provider of non-qualified deferred compensation plans, TBG Financial.
“We have absolutely no experience with nonqualified deferred compensation plans,” is what I said a few days later while standing in TBG’s conference room on one of the top floors of the Century City towers late on a Tuesday afternoon. “But we’re definitely the right company to learn about them, because we’re the right company to learn about anything.”
Over the years, The 4th Floor had attracted a group of professionals that were simply smarter and worked harder to be great than any firm I’ve ever seen or heard about. One year, we had very successfully launched “interventional nephrology” to the scientific community. We were arguably the most knowledgeable heath care communications strategy firm in the country. We had won hundreds of awards, and most recently had mastered the new technologies that allowed us to deliver broadcast quality programming that consistently had proven itself more than just effective.
We went to work for TBG as of that day, and within a few months, I authored and we published a series of white papers that are still easy to find online to this day. I also wrote the book, “The Simplified Guide to Nonqualified Deferred Compensation,” and it was a major success. We had, in less than four months, learned more about executive compensation plan design, and about the many strategies for the informal funding of such programs, that we were now the leading experts in what was a multi-billion dollar, highly specialized field.
Soon our work was noticed by JPMorgan, and then Merrill Lynch… and then by Nationwide Insurance, and then by AXA Equitable, and then Lloyd’s of London… all of whom would become clients of The 4th Floor at the CEO or C-Suite level. I was asked to be the key note speaker at all of their annual conferences.
At Arthur J. Gallagher, where we were brought in by the C-Suite executives, including Patrick Gallagher Sr., I was the kep note at their President’s conference two years in a row. We had simply gained the same level of knowledge in the financial services space that we had developed over many years in the health care industry, and now we were fast becoming know for being able to develop strategy and produce tactics for any company on the planet.
We also found that we could be effective using the new digital video technology level to support major litigation, to help labor law firms stop unionization drives, to even conduct research and produce strategic marketing briefs for AON, Bain & Company, and others.
One of the areas that we dominated was the realm of the RFP (“Request for Proposal”), and creating the written proposals that were depended on to either win or lose tens or even hundreds of millions of dollars by those that make up the Fortune 500. We were… and are… simply the best at winning these high stakes competitions, and there was no shortage of companies that wanted and needed our help.
In 2005, I decided to write another book, this time the title was: “RFP NATION – How to Win New Business in Our Proposal Driven World,” or something to that affect. I immediately was asked to speak on the subject at a plethora of professional conferences, including those held by the American Institute for Certified Public Accountants, and numerous others similar organizations.
My travel schedule was brutal. I was always on an airplane, it seemed, and I was getting tired of it. We launched a new company and developed some new and exciting strategies for the financial services sector, mostly for AXA Equitable in New York, the Arthur J. Gallagher Company in Chicago, and Nationwide, which is headquartered in Columbus, Ohio.
I was still flying around speaking to groups of lawyers and accountants and we were ready to launch a new investment discipline we called Target Income Planning. It was about creating safe and predictable retirement income, something sorely needed by the baby boomer generation that is fast approaching their retirement years.
Then it was September 17th, 2008. Next thing I knew, Lehman Bros. was filing bankruptcy, and Wall Street would never look the same. I had known there would be a meltdown in the near future, in fact I had been writing about what was happening on Wall Street and why it was happening for close to a year, but even I hadn’t counted on our government being so incredibly inept in their response.
I knew I would have to delay the launch of Target Income Planning. I knew it would take some time before anyone would be ready to talk about saving for retirement again… the stock market was in a freefall, and I remembered that after the 2000 bubble had popped, it was a year or two before most people gave up on the idea that “it was coming back”.
To be entirely candid, I wasn’t sure what I was going to do instead, and after Barack Obama won the election, and I learned that he had been the first presidential candidate to harness the poser of Web 2.0 technology, I started doing a little reading on the new technology… and by a little I mean I became obsessed with learning about the new ways to communicate with the world.
Two months later, last Christmas, I launched my first blog on MSNBC’s Newsvine, where I quickly rose to the top of the list of popular columnists and a few months after that, Mandelman Matters was born. Then The Niche Report magazine sent me an email asking me if I would write for them too.
Almost a year later and I’ve written over 360 articles on the foreclosure crisis, loan modifications, and the economy and the political folly that continues to botch the recovery in the rich tradition of Herbert Hoover and FDR. And I’ve had millions of readers, which is not The New York Times, or anything, but it’s not chopped liver either.
Today, I’m committed to being a advocate for homeowners. I’m offended by what the banks have done, and by the way they’ve responded, and I’m shocked by the ongoing ineptitude of our federal and state governments as they’ve botched one attempt after another to stop the spread, or at least stem the tide of foreclosures, allowing the freefall in our housing markets to continue unchecked, and our economy to continue its deflationary collapse.
I’m committed to doing everything I can over the next year to make a difference by spreading the message to homeowners that we have to make noise if we expect our government to act. We must tell our elected representatives that if they continue to vote as the banking lobby wants them to, then there isn’t enough money in the world to get them reelected, but it they vote for the people, they won’t need the banking lobby’s money to get reelected.
I want people to know that it’s not their fault. That no one saw The Great Depression Part 2 around the corner. I want to help heal the shame that binds millions of American homeowners in order to help shorten this crisis even if by a single day.
Twenty years ago I founded a firm that would engineer persuasive communication in order to shatter paradigms, shift attitudes, and change behavior. And if success is measured only in monetary terms then there have been many more successful ventures than my own. But if, however, success is measured by a hunger for lifetime learning and a dedication to doing breakthrough work of which you are proud, then I think The 4th Floor and those that have been a part of it are a resounding success. And I’m proud to have led that team through the ups and downs, and proud of the work that we’ve done together.
What’s next… make a difference that matters, of course.
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