Steve Antoniewicz, The Drum's head of consulting, reflects on this year’s Top 100 ranking of the UK's best-run indies.
Good news has been hard to come by in the agency sector this year, and it’s not hard to see why. Client budgets have been under pressure, big consultancies have brought increased competition and then there's the growing trend of tech companies and clients taking their business in-house. It's fair to say the agency market, and the nature of the client/agency relationship, has been transformed considerably.
But, judging by the results of this year’s independent agency census, there are plenty reasons to be optimistic for agencies in this space. From a broad church of 168 agencies reviewed as part of The Drum's annual survey, we've found average year-on-year growth to be around 25%. In a market oversupplied and challenged on several fronts, that’s pretty impressive and runs counter to most expectations.
The survey looks at UK Independent agencies of all sizes and services and it’s no surprise to see digital agencies continuing to perform well. It is notable, however, that design and experiential agencies also feature highly – particularly in the financial rankings. This is, perhaps, a reflection of client budgets shifting from advertising to an investment in brand and creating better experiences for their customers both on and offline.
The demands of modern clients certainly seem better suited to the natural nimbleness of independent agencies than the big weighty footprints of global networks.
By their very definition independent agencies have a few key advantages. For a start, their loyalty is to clients rather than shareholders. They also have control over their own direction and destiny, which is pretty handy in a market changing rapidly. And, with slimmer and leaner structures, they can boast faster decision-making and response which has huge appeal for clients.
Meanwhile, network agencies continue to be in a state of flux. Take WPP for example – every other week it seems to announce another rebrand or reboot or restructure, from last week's Mark Read recovery plan with its very own Jim Prior-led refresh to September's emergence of the newly-merged VMLY&R. And there’s no sign of things slowing down.
What effect this remodelling has had on the current mood within the WPP camp you can judge for yourself but as for what this message of constant ‘transformation’ conveys to existing and potential clients, well, we can only guess for now. But for sure, plenty clients are already searching for new answers and new models, and some have already created their own.
As always, challenge for some means opportunity for others. So the timing is good for independents. The ambitious ones will take advantage and some at scale are already making impressive in-roads here. Jellyfish, Oliver and Bulletproof once again feature high up in the census rankings and there are a number of others in the UK and elsewhere with the intent and the funding behind them to make a real dent.
Merger or acquisition is always a possibility for the most successful, but for the first time in a long time that action might not come from the usual suspects.
There’s definitely a need for more rationalisation though as there are simply too many agencies competing for an ever-decreasing share of budget. But I think it’s more likely we can expect to see the opposite. When the networks axe headcount, new startups invariably follow. The talent pool also grows, which is a positive for ambitious agencies who can recruit experienced staff not previously available.
The next 12 months will continue to see clients drive the market and change the way they access agency services, but there’s no reason why next year’s census can be even more positive for independents than this one.