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Will 2010 be the year of the agency start-up?

Agency start-ups put the energy into advertising and there’s some evidence around that the latter part of 2010 will see a whole raft of them as the economy recovers and top executives grow tired of life in the holding companies.

There are other factors too: the digital revolution may have knocked the stuffing out of some ‘conventional’ agencies as clients have moved billings online but it has also created an opportunity for new shops in two ways.

The first is that it’s now possible to service a regional or even global account from just one office, or even no office at all if you’re really radical, the second is that clients are demanding big ideas that work in all media, no matter where they come from.

This seems to be the motivation for the departure of top US adman Gerry Graf who is leaving Saatchi & Saatchi to set up on his own. He says there’s a “huge market for creative ideas.” Two top JWT execs, Ty Montague and Rosemary Ryan are also striking out on their own according to Advertising Age.

But we shouldn’t overlook the fact that many senior and middle level managers are just cheesed off working for the big holding companies; Omnicom, WPP, Publicis, IPG and Havas. You can include in this independent media network Aegis which owns Carat and market research firm Synovate.

Advertising is famously the business where the assets go ‘up and down in the lift’ which means that, for publicly-quoted agencies that need to deliver consistent returns to shareholders anyway, the merest whiff of a downturn means that managers have to turn their mind to redundancies.

And there’s nothing more debilitating for most managers than getting rid of people, particularly the relatively expensive middle level people of a certain age who actually do the most to ensure that the agency gets things done to a reasonable standard. These tend to be their pals, people who might well have had the job they’ve got.

As for the holding companies they still have to face fully the reality that you don’t need a flag on each country on the map in which your biggest clients operate. They can see the efficacy of the hub structure exemplified by London’s Bartle Bogle Hegarty (49 per cent owned by Publicis) which manages to handle global accounts through just a handful of offices. But they’re still scared of winding back their networks in case a Ford or a Nestle is unsettled.

Employment levels in the big agencies are beginning to rise again after a ferocious cull but you suspect that they might need to get smaller on a global level if they’re going to bring their cost base into line with smaller national agencies or, of course, the start-ups.

The pattern of recent years is that successful starts-ups have sold all or a stake to the holding companies, BBH being one, London’s Clenmow Hornby Inge another (49 per cent to WPP).

But Mother, for one, is still making its own way and doing well in the US now too. Anomaly, which may be the model for an agency as comfortable in digital as it is in offline media, may be another. London Y&R breakaway Adam & Eve also seems to be picking up some decent accounts.

They do say that the bottom of a recession is the very best time to start your own business, as Adam & Eve did. But signs of life in the economy will surely spur lots of others to take their chance.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.
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