1Mby1M Deal Radar 2012: Elasticity, St. Louis, Missouri

Anyone who wants to have a successful marketing campaign for his business will have social media marketing among the many tools in his marketing tool kit. While it’s possible for a company to achieve success without social media and other forms of online marketing, why would anyone want to ignore such powerful resources?

Elasticity is a digital word-of-mouth firm that provides strategic counsel about using a combination of social media, online portals, and traditional media for customer engagement to companies across the U.S. Founded in 2009 by three former executives from PR agency Fleishman-Hillard, Elasticity’s campaigns have resulted in increased engagement among target audiences that have exceeded what traditional marketing and PR approaches have achieved.

The idea for Elasticity came out of the tremendous changes social media began to effect in the late 2000s. Fleishman-Hillard (FH) was not prepared to change its model to accommodate the growing impact of Facebook, Twitter, and other portals. Dan Callahan, Aaron Perlut, and Brian Cross strongly believed in this new approach and decided to spin off FH to create Elasticity in 2009. Where others were pulling back, possibly because the economy was at a low point, Elasticity offered a new and lower-cost strategy for companies that saw the old way of marketing was not working. The founders used contacts they had made while at FH, among others, to help them penetrate the market. While competitors such as public relations agencies and traditional ad agencies struggled in the social space or tried to create the capability for themselves, Elasticity devoted its energy to staying ahead of the “tidal wave of change.” Since day one, the founders’ mantra has been “mobile, social, search.”

Callahan, Perlut, and Cross, though all former FH executive, have diverse backgrounds. Callahan is a former reporter and editor whose experience includes founding a trade publication in the auto rental industry to leading corporate communications initiatives for RBC Dain Rauscher.

At FH Perlut led corporate communications initiatives for two of the nation’s largest energy companies. He now develops reputation management and marketing communications strategies that straddle social and traditional media realms.  He has worked with companies and brands including Anheuser-Busch InBev, UPS, Capital One, and Unilever. An early adopter of social media, Perlut created online communities and worded closely with bloggers, but he started out as a television producer. He maintains a connection to journalism by writing on marketing and public relations for Forbes and contributing to the Huffington Post, AOL, and others.

Cross does digital and word-of-mouth marketing. He served as FH’s digital global practice lead. Clients such as the U.S. Department of Treasury, AT&T, Yahoo, and Bud Light have entrusted their new media communications campaigns in digital, mobile and social channels to Cross, who is often called up by the media and conference planners to discuss emerging communications.

Elasticity aims to set itself apart from competitors like the founders’ former employer FH, SHIFT Communications, and Edelman by having an understanding of media, social, mobile, and search on a level that those companies can’t match. Elasticity creates campaigns that cause people to take action, something that, according to Callahan, few have been able to do online.

With the remarkable changes in media use, Elasticity believes that the market encompasses all advertising and promotion and enjoys the “best” success with clients who fall into the following categories: new products and services being rolled out to the market; companies that value being viewed as thought leaders in their spaces; companies that welcome healthy discussion among their users and customers; and companies that do not take themselves too seriously. The company’s target markets are multiple system operators (e.g., a cable company that serves multiple communities), startups, financial services, pharmaceutical and other highly regulated industries, alternative energy firms, and agricultural firms.

2011 proved to be a banner year for Elasticity, which had annual revenue of $2.5 million with 15% to 20% profitability. The founders received funding for their venture from St. Louis–based ad agency Osborn &Barr in January 2009. In September 2010, Elasticity became a subsidiary of Osborn & Barr when the founders bought themselves out of the original funding agreement and made Elasticity an independent agency. The company has remained independent and debt free ever since.

Although they are not actively looking for funding, Callahan said he and his co-founders would be “open to any options” and are particularly interested in a partner that could help them acquire larger companies as clients and larger accounts. In the meantime, they plan to concentrate on improving margins.

Content with Elasticity’s current position, the founders have no exit strategy but are instead working hard on building the company and making a difference with a wide variety of clients.

Humor is important to Callahan, Perlut, Cross, and fellow managing partner Andrew Barnett, all of whom participated in the Million-Mustache March in Washington, D.C. in early April 2012.

“In humor, we live,” said Callahan.

Recommended Reading:
Ten Ways to Market a Business When You’re Broke
The 1M/1M Deal Radar 2011: Timeus Interactive, Delhi, India

This segment is a part in the series : 1Mby1M Deal Radar 2012