Is it tougher to open a new agency during a recession?
Despite the dire economic conditions of late, or perhaps even as a result of them, there has been no shortage of new agencies starting up, with creative marketers shaking the confines of big agency life to go it alone and take control of their own destinies.
The Drum recently caught up with a number of new starts to find out the thinking behind their creation. Here we take a look at what difficulties the recession caused our emerging companies as they tried to get their doors open.
Did the fact it was a recession make it tougher to get started?
Recession image via Shutterstock
- Dave Brown, managing director, Apposing: Though marketing budgets are without a doubt tighter, companies are willing to find the money for products that really work and services that add real value. We’re able to show definitive ROI in the projects we deliver that can be directly attributed to something we have produced for a client, such as the 3.3% increase in sales for CSL Sofas. The client is able to see how worthwhile their investment has been and that their trust in our ideas and ability was both founded and rewarding. Clients will return to us again and again because our product is a profitable investment for their brand.
- Tom Sharp, creative director, The Beautiful Meme: Undoubtedly. We’ve had to hustle.
- Garry Allan, managing director, Big Think Agency: Not really. If anything it made it easier, as we had to be totally focused.
- Neil Metzner, co-founder, Black Inc: From where we started it probably didn’t matter.
- Jessica Butcher, CMO and founding director, Blippar: Not really. Our tech has proved so exciting and new (plus low barrier to entry) for brands that we have been inundated with enquiries since our first campaign trials went live and news of what we're up to started to appear in the trade press.
- Tom Pratt, founder and graphic designer, Catalogue Studio: The recession was probably an advantage to us. We started with extremely low overheads so we could work for less than bigger organisations.
- Chris Pyatt, co-founder, Class Creative: It's very easy to look at the current climate, drag your heels and wait for the work to come in. It's even easier to get lost under business plans and profit / loss forecasts - they're all best case scenarios and guess work. What about the worst case scenarios? We realised if we manage our overheads and concentrated on doing a great job for our clients, more work will come – and it has.
- Jennifer Corcoran, partner, Design by House: We kind of put blinkers on and ignored the talk of recession. We had faith that our ideas and hard work would pay off.
- Greig Anderson, creative director/founder, Effektive: Not sure, without any previous frame of reference I actually feel it may have helped as there certainly seemed to be more clients which were receptive to the idea of working with smaller studios and effectively smaller budgets. I suppose the fact that the overheads etc are far lower it means that the smaller studio became a far more attractive and relevant option for a marketing manager with a slashed budget.
- Tina Judic, managing director, Found: Launching ourselves into the agency world in the middle of the recession might seem like a challenging thing to do however we launched with a model that many merchants were very receptive to – risk and reward; allowing merchants to manage their budget and return on investment to the letter.
- Simon Douglas, co-founder, FOUNDED: No, we see the recession as an opportunity and the perfect time to start.
- Greg Jones, co-founder, Glass Jar: Not particularly. As with the previous answer we've been lucky to get a helping hand from friends and family and we've adopted a very lean approach to running the business. We actually believe that setting up a business in a recession will serve us well when the economy picks up, as the approach we're adopting now will stand us in good stead for the future.
- Helena Bullivant and Kate Myers, co-founders, HERO: No, the recession has been good to us. We’re lucky in that amid gloomy economic forecasts our clients had products they were keen to advertise on TV. And despite the increasingly crowded marketplace our clients have emerged from the downturn in a much more profitable situation.
- Chris Gordon, new business director, Ingenious Rapport: Persuading clients to work with a new agency was and is difficult in the current climate but once they start to see the benefits we can bring to their marketing it becomes easier.
- Debbie Happell, director, Kayak: It's harder for the organisations who have been around a while – the big machines who are finding it hard to maintain what they have built up. We knew what we were getting into and aware of the current economic climate, so were able to build that into our business strategy from the start.
- James Lonergan, creative director, LONO: I don’t believe so. I set up LONO creative in a supposedly, unfavourable climate. The recession has stalled the economy for the foreseeable future and businesses have had to be frugal with their budgets. Regardless of these restraints, all I could see was a time to thrive in business. Everything is cheaper in the recession, so it’s a great time for companies who outsource they’re design and marketing requirements. Setting up in the recession is an aberration, yet so are LONO Creative. We have an alternative outlook on creative design. We’re optimists, not pessimists. We see opportunities in a time when others don’t.
- Gerard Savva, managing director and Becky Edlin, creative director, Magpie: Not really, during the recession it was beneficial to us to be small and have low overheads so we could keep our fees down. Our work and service levels matched up to the larger agencies so we quickly became a good choice for a wide range of clients. By having a specialism, the student and youth sector, it was easier to promote our services to targeted clients.
- Pete Sharp, designer and director, March Design Studio: Yes. For example, many of the public sector clients we worked for in previous roles have either tightened their reigns, employed in-house designers, or disappeared altogether! Private companies also seem cautious. Add that to the fact that we seem to be living in more of a 'clip art', 'cheap templates', 'that will do' age, and it all points towards a challenging landscape for creative businesses.
- Martin O’Toole, managing director, McGrath O’Toole: Yes and no. On one side, larger brands are a lot less likely to move to a new (and small) agency in these uncertain times. On the flipside, the complacent agencies are more likely to be kicked into touch. Recession has, and always will bring opportunity to the right kind of businesses. In that regard, we’ve welcomed it with open arms.
- Jason Cartwright, founder, Potato: Quite the opposite – the recession has opened up hiring opportunities for us. This is especially true for finding highly qualified and motivated candidates from other EU countries. This isn’t to say that there isn’t still a massive skills shortage of the highly specialised people we’re looking for, though.
- Rik Hopkinson, creative director, RedMeat Creative: The digital online marketing place is expanding and growing all the time and we saw opportunities out there that we could tackle head on. We started RedMeat with lean start up costs but with ambitious targets. We were confident offering affordable solutions with awesome designs would be a winning formula. Despite the recession there are a lot of young entrepreneurs out there with drive, ambition and great ideas, unfortunately sometimes they aren’t taken seriously. We see these kinds of start-ups as a great opportunity to shape and grow a fresh business from grass roots and forge a long term relationship. In the case of Urban Alpha, Andrew has already picked up a shell live wire award and doing very well. We listened to his ideas and made sure the budget he had available went as far as possible to make his website contend with the established brands.
- Laith Clark, managing director, TapMob: Definitely, confidence affects all businesses so convincing clients to spend their budget with a start up is always going to make it that bit tougher.
- Marcus Foley, client partner, TOMMY: We think the opposite. We are able to be super competitive on the ratecard so have worked on some fantastic projects. Though we bring big agency experience and quality to our work we don't bring the sometimes excessive fees associated. This has helped open the doors from day one and build a successful business.
- Brian Whigham, managing director, Venn Digital: No. Businesses have money to invest as long as they can see it will benefit their marketing plan online. Budgets have been tighter but i wouldn’t say the recession has had a holding a negative effect on us too badly.
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