An ad agency put graffiti artists and Instagram stars in charge, and managed to pull in $30 million in revenue

The AnnexInside The Annex at Chicago
  • The Annex is an ad agency within the global advertising network Havas, but it doesn’t look or function like a traditional ad agency.
  • Instead of classic ad executives, it is steered by musicians, social media influencers and mural artists.
  • The company aspires to establish a new kind of model in the advertising industry, driven by employees shaping its culture.
  • It seems to be working, as the agency is expanding not just nationally, but globally.

A decades-old global ad company thinks it has cracked the code on how ad agencies can remain relevant at a time when their very existence is under threat from various quarters.

By not acting like an agency at all.

The Annex may be under the umbrella of global advertising network Havas, but it doesn’t look or function like a traditional ad agency. Because instead of creative directors, strategists and account executives, its reins are in the hands of musicians, social media influencers and mural artists.

The onset of digital media has accelerated the speed at which culture evolves, something that marketers are not always able to keep pace with, according to Havas Creative U.S. Chairman and Chief Creative Officer Jason Peterson.

Thus, the Annex’s mission is to help its clients remain on the cutting edge of cultural trends, by engaging and interacting with the very influencers and artists at the forefront of these trends, as opposed to playing catch-up with them.

In other words, the idea behind this new type of agency is to shape trends, not follow them.

“The truth is that brands think they can buy into culture, and advertising agencies don’t truly understand culture,” he told Business Insider. “The Annex is our response to that fundamental problem.”

“We knew that in order to be tapped into culture, we couldn’t fake it. We had to live immersed in it every day,” added Havas Creative U.S. Chairman and CEO Paul Marobella. “The Annex acts as a living, breathing study (it has hosted everything from concerts to art shows for example, like a Summer Concert Series) in emerging markets and allows us and the brands that we work with to tap directly into.”

The new agency is run by artists, not ad executives

The company is also staffed by an eclectic group of millennial talents, in line with the trend of several millennial and Gen Z-focused agencies cropping up in recent years. But unlike other places, here you don’t even need to have advertising experience to get hired, as long as you are in the throes of art, music, film, fashion or social media. Peterson himself is a popular Instagram photographer and influencer.

Take, David Muniz, an art director at the agency, who was previously an art director for American DJ and designer Virgil Abloh at his Chicago store RSVP Gallery.

Or Lefty, a popular graffiti artist in the Chicago area, who is an artist-in-residence at The Annex, with his own studio in the basement and several of his murals decorating the office space. Or designer Brandon Breaux, who designed Chance the Rapper’s mixtape covers and freelances for the agency.

The model may be unorthodox, but it seems to be working.

Since Peterson and Marobella set up shop in the Ukrainian Village neighbourhood of Chicago in 2015, The Annex has grown to encompass over 200 people across the US, worked with recognisable brands including McDonald’s and Mike’s Hard Lemonade and raked in $US30 million in revenue.

These marketers have hired the Annex to deliberately not do traditional ads.

“The Annex is focused less on creating the perfect 30-second spot, and more on developing interesting content, a narrative and connecting the brand in way that reaches today’s consumer’s on the platforms they use most,” said Sanjiv Gajiwala, VP of marketing at Mike’s Hard Lemonade, which partnered with the agency to create a digital campaign this summer. “Its content creators are intensely connected to what’s viral and talked most about amongst consumers. This is the way that people and brands need to interact today.”

The campaign has helped the brand surge ahead on its upward trajectory, said Gajiwala. Mike’s Hard Lemonade has emerged as the fastest-growing top-10 beer company in America, according to market research firm IRI with 2017 expected to surpass its total sales of $US293 million.

The AnnexAn event hosted at The Annex

The Annex is expanding, but trying to stay unique by embracing local flavour

And now, The Annex is setting its sights on expansion. This year, the Havas entity has expanded to New York, Atlanta and Singapore, with plans to expand to Los Angeles, Paris and Tokyo in the forthcoming months. The company will soon partner with Universal Music (part of the same parent company) to found Annex Music, a music label for up-and-coming independent artists.

Peterson and Marobella envision The Annex to be a third creative network within the Havas umbrella, in addition to the agencies Arnold and Havas itself – with each of the locations having their own area of expertise and value. In New York, for example, the acquisition of digital agency The 88 led to the creation of Annex88, which has rising young talent in fashion, music and art. The office will also house Annex Music, as well as a recording studio.

On the other hand, The Annex in Atlanta is dedicated almost entirely to doing social media work for Coca-Cola, with 45 employees residing full-time in the brand’s headquarters. The Los Angeles location, meanwhile, will serve as a hub for entertainment and music.

While all of these locations will look to attract some of the leading local artists and creators, they will maintain the same core purpose: serving as cultural hubs in their own right. Plus, brands will also be able to go bigger, by tapping into the global network for broader cultural insights.

“Our vision for The Annex is for it to be meaningful, culturally relevant and the largest creative network within Havas,” said Marobella. “We want to create value for brands in more authentic ways, without all the rhetoric and baggage that the industry comes with.”

*This post has been corrected to reflect The Annex’s revenue for 2017 as $US30 million. The agency originally told Business Insider that 2017 revenue was $US80 million.

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