Fat Atom Marketing’s demise hastened by lean pandemic budgets

The novel coronavirus proved to be the final nail in the coffin for Carmel-based Fat Atom Marketing. The agency closed late last month after 15 years in business and several years of struggles under new ownership.

Founder Todd Muffley sold Fat Atom, which got its start as Plan B Marketing in 2005, to Jennifer and Adam Fox in 2017. The firm, which specialized in marketing strategy, branding, lead generation, web development and graphic design, has had its share of problems, but the Foxes view COVID-19’s impact on clients’ marketing budgets as the final straw.

“They went from eager to talk, to wait and see, to everything is frozen in the space of about two or three weeks,” Adam Fox, the firm’s vice president and marketing director, said. “Unfortunately, the difference was enough that government assistance wouldn’t have helped the business stay afloat.”

Fat Atom ranked as the Indianapolis-area’s 17th largest advertising agency in 2016, according to IBJ research, based on reported full-time employment of 20. The company fell to 19th the following year, reporting 19 employees. In 2018, the company’s ranking fell to 23rd, with employment falling to 14.

By the time it closed in late March, the company had a total of six employees, Fox said.

At the time of the sale, Muffley told IBJ that Fat Atom’s local capitalized billings grew from $2.4 million in 2014 to $7.6 million in 2015. Revenue grew from $950,000 in 2014 to a high of $2 million in 2016, he said.

Fox said those numbers were inflated. Muffley told the IBJ this week that he stands by those numbers.

Fox said, prior to the recent decline in business caused by the pandemic, Fat Atom was already suffering from the loss of several major clients that transitioned to in-house marketing.

Industry experts predict there may be a wave of marketing-firm closures due to the economic hardships brought on by COVID-19.

David Baker, a Nashville, Tennessee-based marketing consultant and the former owner of Warsaw-based Utilis Inc., said companies that typically proclaim the importance of marketing are now cutting those budgets to staunch pandemic-related losses.

In a average year, about 15% of the roughly 55,000 marketing firms across the United States and Canada close due to mergers, retirements or financial hardship, Baker said. This year, due to the novel coronavirus, Baker expects that number to double.

“But it’s not going to happen immediately,” Baker said. “We’re a very lagging indicator. The bad news doesn’t hit us as fast as consumers.”

Despite the drastic reduction, Baker said the switch to agile digital marketing puts firms in a better position than they were after the 2008 recession. That’s because it’s easier to pause a Google advertisement than it is to put up and take down a billboard.