‘It doesn’t intimidate us’: the founders launching ad agencies in a recession

With the global economy entering choppy waters (the Bank of England predicted earlier this summer that the fourth quarter of 2022 would bring a recession, while both interest rates and consumer inflation are rising across the world) the prospect of launching a new agency is looking even more intimidating than usual.

So, what does this mean for adland’s newest startups?

Sergeant Walnuts

Gary Toal and Richard Attwater – formerly of Manchester, England creative agency Love – chose to launch their new business at the end of August. The branding and comms agency has been named after one of the cat names offered for sale on Twitter by Bob Mortimer, with Attwater telling us they posted the comedian the princely sum of £8 in an envelope.

While not ”hell-bent” on working in particular categories, Sergeant Walnuts will likely focus on the booze sector, says Attwater.

”We’ve got loads of experience in the world of alcohol, from building up new brands through to comms and packaging, design and everything in between. We hope that there’s going to be a whole sort of class of alcohol brands that will need our help.”

For its first year of trading, he says the plan is to rely heavily on freelancers, keeping costs low. In the face of a recession, Attwater suggests that could put the agency in a competitive position.

”We hope that we can offer the same really high caliber of work without these enormous overheads and rate cards that you get with big agencies. Hopefully, that’ll be a compelling position.”

Though he argues clients shouldn’t be looking to cut down on marketing activity itself (”the last thing you want to do during the session is lower your marketing spend”), more scrutiny of agency fees by clients will likely make a less expensive offering more attractive.

”If clients and brands out there are looking to reduce marketing spend then hopefully we’ll fall into a sweet spot because they’re going to want to get more for their money. With our low overheads, we can make it much more affordable so they’re not really going to have to compromise on anything.

Hypnosis

Based in Perth, Australia, Amber Martin and Guy Patrick have just launched their agency – Hypnosis. The company kicked off with two founding clients – Dirty Clean Foods and Lightning Minds – to which the duo hopes to bring global brand experience based on their time at Wieden+Kennedy and The Works respectively.

Martin tells The Drum the business won’t limit its scope to Western Australia. ”With changes in the way businesses can operate post-pandemic, we believe we can partner with companies based in any region. We want clients that see the power of creativity and will embrace the challenges that come with doing different kinds of work. Clients that are looking for big impacts, not just incremental growth. Clients that realize doing the safe thing is the least safe thing.”

Worsening economic weather, Martin says, could play to the strengths of small agencies looking to punch above their weight. ”Now is the time for small agencies, not big cumbersome ones.”

She adds: ”I would say that now, more than ever, is a time when clients should be looking at their agencies and considering their relationships. Consumers are watching every dollar they spend, so it means the work needs to be braver, smarter and work harder.”

”It means we need to leverage creativity more than media spend to cut through. We need to make people feel something. And, of course, give them plenty of good reasons to buy your product over another.”

Meanwhile

James Cross and Tim Jones are due to launch their agency enterprise, Meanwhile, in October. The duo – famous for their eye-catching work at BBC Creative – aren’t worried about the timing. In fact, the launch is the culmination of years-long ambitions.

”We’ve been talking about starting a business probably since 2010,” says Cross. ”We’ve had several false starts... in some instances, we’ve got right down to working out equity splits before things ended.”

This time around, he says, ”the stars aligned,” recession be damned.

Like Sergeant Walnuts, the pair and their as-yet unnamed third partner plan on initially staffing up with freelancers. Business leases being cheaper in Manchester than in the capital will also help keep a lid on costs while offering access to that city’s creative scene.

”Manchester’s buzzing, creatively,” says Cross. ”We need to keep overheads down at this stage and not over-commit. At the start of a business, finances are always really precarious. And between us all we have nine children and three mortgages to pay, so we’re keeping things tight for now.”

Though open-minded about clients, Cross says the agency will likely be focusing on sports brands, given their work popularizing the Olympic Games and the World Cup for the national broadcaster. ”We’re looking for clients that are ambitious and certainly clients that have an offer, a product or a service that exists in popular culture.”

On the prospect of a downturn or recession, he says: ”It is certainly not something we have ignored in any way, but the way it has influenced us is making sure we’re efficient and offer value. We need to be very wary of what consumers are thinking and on top of consumer trends.

”It’s not something that intimidates us... it’s a challenge to overcome.”