Startups, the new kids on the block, are in demand from agencies and brands in search of new ideas and solutions. But is the value exchange always a fair trade?
Startups are the new darlings of ingenuity, and advertising agencies are eager to tap into their fresh thinking. Free from hierarchical structures, the agility of startups to deliver innovative solutions is inspiring brands of all shapes to get in on the action.
Agencies want to draw on this thinking for clients, while startups want access to brands and agencies’ experience of complex campaign execution. A collaborative approach, benefiting all. In theory.
In reality, however, the journey is hampered by lack of transparency, unclear briefs and a failure to follow up on brainstorming or hackathons. Startups can be left feeling unfulfilled, exploited even, while opportunities for true collaboration aren’t readily seized upon.
Hackathons have become something of the norm, but some are questioning their relevance. According to Rose Lewis, co-founder of accelerator Collider, a lot of agencies are running hackathons without full consideration of their impact, and failing to orchestrate proper follow-up.
“Agencies treat it as a one-off, and there’s no forward thinking around what happens after the event. They think ‘let’s get some startups and some brands in’, but then nothing happens after that because they haven’t really thought about it.”
For Eamonn Carey, consultant to a number of startups and accelerators, hackathons represent something “unpleasant” as he believes they offer little value to the startups.
“There’s something slightly unseemly and frankly unpleasant about companies with massive marketing budgets putting on hackathons. Their sole contribution is 15 pizzas, 40 bottles of beer and a £2,000 prize, while a creative agency will charge a lot more for a 48-hour brainstorming session.
“There has been a bit of tension when startups have gone into something thinking they were talking about a business relationship, and it ended up being a bit of a dog and pony show,” he added.
So does the hackathon need hacking? Is it exploitative? Sam Oakley, the co-founder of StashMetrics, while happy to partake in such events as long as the value exchange is clear, feels that the term is misleading. “My experience of hackathons is that very little hacking takes place. I’ve been to a few now and most have been rebranded brainstorms. The value is variable but it mostly depends on how clear you are about what’s expected of you before you commit to attending. There’s a bit of a trend of startup entrepreneurs being invited to hackathons just because they think differently. That’s fine, I’m normally happy to exchange ideas for contacts, as long as I know that’s what I’m doing.”
Collaboration is further hampered by fundamental differences in culture, structure and business operation, with agencies and startups motivated differently. Organisational hierarchies and even the way in which startups are paid can cause friction. Emily Forbes, founder of collaboration platform Seenit, echoes the importance of communication, suggesting agencies could give clearer indication of what stage a pitch is at prior to the startup’s involvement. It’s also easy, she says, for startups to fall into the trap of being overly enthusiastic to work with a brand, resulting in unnecessary tweaks to their product or service to make it fit their needs.
“It’s easy for a startup to want to work with certain clients and agencies and before you know it, you’re customising features on top of your platform that no one else will buy just to fit one client’s need. There are so many game changing startups now that it’s about finding partners that help you mould and respond to briefs.”
Startups also operate at a different pace from agencies, often able to move more quickly than more established companies. According to Brian Wong, founder of Kiip, which recently partnered with Campari America and its agency Mindshare to come up with a CSR solution for alcohol brands, this can result in clashes. “Even though an agency might be looking for a short-term initiative, a startup may be able to push out a solution in a shorter timeframe, leaving areas where the two don’t match up. “On the flip side, a startup may not have access to the resources they need to complete a project, so they must make sure they choose projects wisely in order to stay true to the agency’s vision.”
Havas Media is one shop collaborating with startups through Collider’s programme. Amy Kean, head of futures at the agency, believes the industry’s desire to work with startups can be a waste of time. “The advertising industry goes through phases. At the moment everyone’s obsessed with startups and too many agencies just want to get a lot of startups in a room so they can get new ideas. It’s a waste of startups’ time; it doesn’t actually benefit anyone.”
Kean calls for the development of industry-wide guidelines to better navigate the relationship. “There should be some kind of code of conduct or best practice guide for agencies and startups working together. For example, payment terms, ways of briefing, ownership of IP etc. This would be extremely useful for both parties and would help make the market more mature, ironing out all the teething problems.”
According to the IPA such a guide is already in development, led by its Brand Tech group in partnership with the London Tech Advocates Creative Tech Forum. The IPA told The Drum the guide will be in three sections, to be released this autumn, spring and summer 2016, and will involve consultation with all players in the mix.
Client needs and expectations naturally take priority for agencies, for whom a short-term service-based approach often tends to prevail. But innovation flourishes outside of client briefs and requires a shift away from the traditional agency mindset, according to Lewis.
“The startup has something they think is innovative and solving a problem, so for us it’s about working on that first of all, rather than doing what agencies traditionally do – and in a way this is a hack – coming up with a brief and putting it out to a startup, and the startup then trying to fit that brief. It’s like putting something round into a square hole.
“Nobody put a brief out for Facebook. They allowed space for innovation and thought about how the technology could be used to better engage consumers, rather than ‘how can we use this to help us find 50-year-old men in red trousers?’”
While mindsets are unlikely to change overnight, putting innovation in a box is unsustainable. Wong says: “Agencies are trying to take innovation and make it fit into the digital advertising norms we’ve seen for the last 15 years. Everybody wants innovation to fit in their cookie cutter spreadsheet. Innovation doesn’t do that.” When it comes to true collaboration, rather than putting startups in their innovation box, agencies stand to gain more by treating them as partners.
This feature is published in the 30 September issue of The Drum.