Why smaller, independent agencies will be able to ride out the stormy advertising horizon
Thanks to Brexit and the resulting caution over everything from growth plans to how much budget advertisers will part with, the next 18 months are looking rocky to say the least. And, during economic uncertainty it’s smaller agencies that may feel the waves first and hardest.
Will small agencies have an advantage in uncertain times?
But, during The Drum’s Brief Encounters conference this week there was defiant mood of confidence from the smaller and more nimble outfits in attendance that, come what may, they are arguably in a better position than adland’s giants to weather the storm.
This positive outlook for the future has been squarely anchored to the swelling pressure being put on brands to be across the myriad of touchpoints that exist, each of which is constantly changing its advertising products and its content offerings. It’s an argument made time and again, but in today’s climate the independent agencies are seeking to prove more than ever that they can rise to the occasion.
As Mr President founder Nick Emmel put it: “Unless you have got a specialism most agencies talk about the same thing, the proliferation of media channels etc. Increasingly important is being able to prove what they do, not prove a philosophy of what they say. We have reached a stage where we have got proof in the pudding with all the things we do. We try to differentiate ourselves by our output - I think that is more powerful than buzz words,” he said.
But, that’s not to say there are not concerns about the coming years. Business intelligence firm Advertiser Perceptions recently conducted a study which found that some 48% of client-side marketers believe that "the industry is changing so fast now, it's unclear how agencies will be viable in the future.
The uncertainty is underpinning a spate of agency reviews from many top advertisers in the coming year, according to the same report. Some 66% of advertisers are planning creative agency reviews, 64% will review media agencies and 61% could look to review digital agencies.
Although the study was US based, it's findings will have a ripple effect across other markets. Unsurprisingly then, Emmel’s biggest concern is the “exploitation of the pitch process”. He called it “a very convenient tool” for marketers to get new ideas to the table when budgets are tight and said the promise of an ongoing relationship, which smaller agencies rely on to secure growth, is “less clear now”.
“It is easy to send off five eager agencies who are all equally keen for business without defined promise of an ongoing relationship. We are seeing that happening increasingly, often with good intent but a lot less assurance. It is about getting back into that place where it will convert something, secure opportunities in the long run. As a strategist, it is often my bit that goes for free,” he said.
Microsoft’s UK chief marketing officer, Paul Davies, tried to reassure those in the room looking for advice on how to successfully engage in the long-term with brands of its size.
On an average day, he might be approached by as many as six unknown agencies looking to pitch a service. “It’s constant and I’ve just not got the time to go through them so I appreciate it can be hard to stand out [as a small, independent],” he said.
For him, the best way to stand out is to simply spend time learning about the business or the industry, understand its pain points and approach a potential contact armed with bespoke research on how your agency might solve a problem. If not, attending as many industry events as possible is vital as email is just too blunt a tool.
And when it comes to small agencies collaborating with the industry giants, Davies is looking at ways to level the playing field.
Instead of individual briefings on a project, Microsoft is moving to a model where it will brief all agencies of varying sizes and disciplines in the same room, on the same day to give everyone equal opportunity to show what they can do and how best to work together.
“It means they all get a piece of the pie. If we have a big idea we want to execute this is the way we want to work,” he said, although admitted that such blurring of lines means there is inevitably a challenge in renumeration.