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Do we need another agency?

By The Drum, Administrator

October 4, 2007 | 8 min read

Mightysmall

Well, for one thing, cost isn’t prohibitive – starting a small design or advertising business is not hard, or too expensive [although, making it work is another matter].

“Anyone starting up, I would wish them luck,” says Brian Crook, managing director of The Bridge.

“Whether there’s a good or a bad time, you can only ever tell that with hindsight. If you look at two agencies out there who are regarded as being very successful, The Union and Newhaven, my understanding is that both of those, after 12 months, were seriously wondering whether they had made a big mistake. Effort and a bit of luck have changed that… Other agencies didn’t make it.”

In a time when it would seem that there are more marketing agencies than big brand clients, it’s hard to envisage how new-starts believe that they will not only be able to launch successfully, but also sustain themselves and grow, says The Union’s managing director, Ian McAteer: “The market isn’t screaming out for a new agency. Hats off to anyone that wants to have a go, but I’m not sure that this is necessarily a smart place to be investing time and money. Let’s be realistic, it’s very tough to survive.”

Some would suggest that such soothsayers are only fearful for their own business’ success with the markets continual peppering of new agency start-ups. However, Guy Robertson, managing director of GRP and chairman of the IPA Scotland, believes that any agency that offers “something different” will have a chance without unsettling the applecart.

“I am a great believer in a free market economy, in any given market,” says Robertson.

“Supply and demand will dictate however many agencies or otherwise there are… if a new agency starts and it finds a niche for itself and it satisfies demand then it will survive while others will fail.”

Yet, many industry figures still admit to a degree of surprise that anyone would wish to join the fray. “Having a good reputation, having good case studies and having clients who are happy to endorse what you do, are all key when driving forward. However, starting out, you won’t always have this. And previous reputations can only be taken so far,” says Simon Farrell, managing director of Tayburn.

There is one winner, at least, with any heightened competition – the client. Costs are driven down as agencies compete for business, with service levels rising to try and keep that business. Clients get more for less. Meanwhile, the perpetual movement of clients – and the subsequent fire and hire agency culture created – leads to other potential pitfalls for the industry.

Jonathan Shinton, director of Newhaven, highlights the lack of younger agency heads coming through and bringing new ideas and traditions with them, as one such problem.

“Generally, there is a level of agency chief between the ages of 45 and 60. They tend to have a certain view of what they want to get out of an agency and they’ve all grown up with Faulds, Halls and Leith. Their experience is in the past.”

Shinton continues: “There’s no way a bank would back someone in our sector now, unless you put up a hell of a lot of your own money. They might match you pound for pound in terms of funding, but it’s a bit of a catch 22 – unless you’ve got a lot of your own money and you want to take a risk, then the conservative nature of funding means that it’s difficult to start from scratch.”

Of course, Newhaven launched with the backing of one of Scotland’s most influential clients – Tennent’s. But most newly launched agencies will not be so fortunate. Still, the dream and determination to make a mark will drive many forward.

“People want control over their own destiny,” says Richard Marsham, managing partner of The Leith Agency, “It usually happens in the second tier of management when people become frustrated that they’re not getting to the top. With Newhaven, it happened because it was initiated by a client, which we had to resign. It put the seed in their mind, although they may well have been thinking about it anyway.

“Breakaways happen for several reasons,” continues Marsham, “because people are made redundant, because people fall out with senior management and because people think that they can do the job better themselves.”

Yet, it isn’t always ‘greatness’ that start-up businesses aspire to, says Mark Fowlestone, managing director of Multiply: “There’s no reason why everyone has to start a business to create something big. There are loads of people who realise that they can start up on their own and lead a tidy life out of it.”

Of course, start ups are going to find it difficult to launch themselves unless they have several clients on which to work, sustain themselves and build a reputation on as a result.

According to Del Sneddon at Pocket Rocket, which opened its doors in June, the hardest part about opening a new agency in Scotland at the moment is getting in front of a potential client.

“There’s enough work to go around you just need to position yourself at the right level,” says Sneddon. “If you’re a small business going for a blue chip client in Scotland, you will be chasing your tail for quite a while without getting any work. Some of the bigger companies are taking their work in-house now, still, there will always be scope for work.”

Adrian Jeffery – who has recently launched Mightysmall – also believes that if the people starting up an agency are confident, and they have a product and reputation that clients wish to invest in using, then it makes sense that they should be successful in launching their own venture.

“If you’re going to start a company you have to think long and hard about what you’re going to offer clients that will make them want to give you their business… that has to be your starting point. What the marketplace is like in terms of economy, that seems almost secondary if the company thinks it has a real selling point,” Jeffery continues.

Jeffery adds that the better the agency is, the more breakaways it should have – this may be something, he believes, that is seen less often in Scotland, however.

“These things aren’t cyclical, but they are often inspired by others. When someone launches a company, others think ‘I wished we’d done that’. And the idea grows from there.”

Over the years, as market-share has been squeezed, many within the industry have pondered the option of merging businesses – some even proposing a merger on a grand scale, looking to bring more European and International clients to Scotland.

However, these days, amalgamation seems even less of an option than it was in the big-spending, halcyon days of Scottish advertising.

“I don’t know if anyone would be prepared to do it. Two or three giant agencies would be much better for critical mass and we would give ourselves a fighting chance,” says Ian Wright, managing director of Family. Although he is quick to admit that this is one idea that would be afforded even less time than a struggling start-up by most in the industry today.

Wright reflects on the agency scene in the mid nineties. A time of fewer agencies, but much bigger clients, with agencies like Faulds winning clients such as British Midland, Direct Line, Kwik-Fit and Auto Trader. “There’s no one that can compete on that level just now, but consolidation would improve the situation,” he admits.

One such proposal was muted in the ‘80’s by advertising stalwart Ash Gupta. “In 1985 I invited the MD's of all the major Scottish agencies to have a chat in my boardroom,” says Gupta. “The idea was a simple one. Let's merge and we would have a single £100 million agency to address a £200 million local market. But importantly, we would have the scale to go after the big brands we longed to service. This was a comfortable step in my mind, but not for the likes of Faulds, Baillie Marshall and Marr. They all said, ‘nice thought Ash, but we can do it ourselves’...wrong! Every agency round that table is now history.

“We still do not have the power to compete head-on with majors in London, Tokyo, LA, NYC and Paris. We are all still niche players in the real world. Not always a bad thing, but we could create a real agency of scale if we wanted – and our egos would permit. We have the people but not the will.”

At the end of the day, it’s not just Scotland that has witnessed a tightening of the market. It remains a fertile country sustained by new blood and new ways of thinking. Perhaps it is this that the proliferation of new-start agencies can offer the market? If not, what is the point?

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