Owning the Ad

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Anomaly won the account last year, beating out such in-demand agencies as Goodby Silverstein and Crispin Porter & Bogusky. They received a small, undisclosed fee up front for marketing efforts like print and outdoor ads, and a Web site running a contest to "name the planes", but Anomaly will also take a percentage of sales from extras like in-flight entertainment and Burton branded luggage, which it helped to develop and produce. In another first, customers can order the Burton luggage on board their flights.

Retaining and profiting from intellectual-property rights is new territory for advertising, though clients, keen to turn the old, time sheet-centered model of advertising on its head, increasingly are looking for authentic partnerships with their marketing teams. Last year, Seattle agency Cole & Weber/Red Cell, a subsidiary of WPP Group (WPP), produced a TV sitcom that prominently featured Rainier beer (made by Pabst Brewing), with the agency retaining full ownership of the show. Anomaly is betting this will be the model of the future. With an equity stake, says Johnson, the motivation to help a client succeed is more genuine—and the results more impressive. "When we own the IP or we share in the revenue, you can bet we're going to work all day, every day." While revenue-sharing projects currently contribute only about 20% of Anomaly's revenue, Johnson estimates that in 10 years it may be more like 80%. In 2006, Anomaly recorded revenues of around $15 million.

"They live and die by the success of the product, and to me that's very powerful," says Hosain Rahman, CEO and founder of San Francisco-based Aliph, who hired Anomaly for the 2006 launch of Jawbone, its Bluetooth headset designed by Yves Béhar, founder of Fuse Project. In this instance, Anomaly holds no intellectual-property rights and is acting strictly as a marketing department: doing market research, media buys, events, and PR. But all of the agency's compensation comes from an undisclosed share of headset sales, a model that sees the agency displaying a huge deal of faith and commitment to a product they didn't help produce. "We are certain we have the best Bluetooth headset to back," says Johnson. Asked if he would soon go back to a fee-based ad agency, Rahman replies, "Probably not."

A True Partnership

Anomaly will wade deeper into the waters of intellectual property at yearend when it launches Eu (pronounced "you"), a line of skin-care products designed and produced with entrepreneur/partner Tammy Ha. The agency will help with marketing and bottle design, and Ha, a former chemist with Neutrogena, is creating 14 or so products, including cleansers, toners, and night creams priced from $50 to $180 each. In this case, company ownership will be split three ways: one-third to Ha, one-third to the agency, and one-third to private investors.

Johnson admits there are uncertainties in the more entrepreneurial projects that make projecting growth a shaky business. "A huge number of new businesses and new brands fail. We have to speculate widely in the belief that some will succeed and that the successes will outweigh the failures," he says.

Suppose it works. If Eu becomes a top-selling product line in high-end department stores across the country, Anomaly has the option of spinning the brand off into its own small business or selling off its shares to the highest bidder. The company has already incubated two successful ventures this way: ShopText, a mobile commerce platform spun off last year; and Lucky Media, a brand that sells ad space on the backs of lottery tickets, which Anomaly sold to Michigan State Lottery. In both companies, the agency retained a share of revenue.

Still, Anomaly knows it can't shrug off its skin as a traditional marketer just yet. A quote stenciled on the wall in the company's posh SoHo loft, attributed to George Bernard Shaw, reads: "The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man." Perhaps Coca-Cola, with which Anomaly has unsuccessfully tried to forge intellectual-property partnerships in the past, is one of the unreasonable men its progress depends on. "That's a great big corporation that has to tread very carefully about how it moves forward," says Johnson of Anomaly's first client, adding that "it wouldn't surprise me in the end if they [want an IP partnership]. If they could create brands rather than buy them for billions, it would be better for them." And, of course, for Anomaly.

MacMillan is a reporter at BusinessWeek.com in New York.