Paul Tully: Creating events brings advertising to life

When Paul Tully lost his job as a marketer at radio station Jazz FM in the mid-1990s he moved to Hoxton, London, "because rent was cheap". Lots of creative people (including fashion icon Alexander McQueen) were doing the same. Their presence gave him an idea. "Some of my artist friends used to ask me to help them organise gigs or exhibitions I think because I'd worked for Jazz FM I was the professional one'." He quickly realised this could become more than a hobby.

In 1999 he set up Tully & Co "one of the UK's first youth marketing agencies". Tully, 32 at the time, felt that he could help brands target younger audiences. "It was a good time to be in marketing, and brands were prepared to spend money and try something new." His first big client was Fosters Tully created an innovative street-art campaign that allowed graffiti artists to showcase their talents on branded billboards. It went well and he won an award from influential advertising magazine Media Week. Now he "expected the phone to ring non-stop with new business". It didn't. So he launched a new firm, Pd3, in late 2000.

His new emphasis would be on events. He also took on a partner who had a similar one-man agency. One of their first projects was The Guardian. Despite sponsoring Glastonbury Music Festival, the paper's participation was limited to selling newspapers at the event. Tully organised a small Guardian stage where readers could listen to relaxing music, drink coffee and read the paper. Using contacts from his Radio Jazz days he was able to persuade headline acts to perform impromptu gigs in his arena.

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It was a success and the extended contract with The Guardian helped Tully persuade other big names to hire him. Sales gradually rose above the million mark, but the business was not very profitable. "We weren't getting the prices right and were charging too little." Pd3 was also hit by "contagion from the dotcom bust". Suddenly firms doubted internet advertising and that scepticism then spread. By 2004 Pd3 "was struggling" and Tully's partner wanted out. "Our accountant made it clear that we had a fight on our hands to save the business and my partner wasn't up for it." Tully bought him out and pressed on with the firm's staff of seven.

His partner's timing could not have been worse as the sector rebounded Pd3 signed a wave of new contracts, including one with O2, as firms began to spend again. One new deal came from 118118 directory services. "They had already created the iconic marathon runners. We pulled a number of live stunts, sending the runners around the capital to raise awareness and interact with people in a way that a TV campaign can't." By 2007 Pd3 had won contracts from multinationals such as Reebok and Casio. Annual sales reached £3.5m.

When the financial crisis hit in 2008 Tully feared Pd3 would shrink again. But the opposite happened. "This time clients decided to cut the big, conventional advertising contracts and find more cost-effective ways to advertise." Pd3 began to win more advertising contracts from its existing clients. By 2010 annual sales had risen to £7.8m. Ever the marketeer, Tully's next challenge is to fund a "blockbuster film" through product placement.