The times are against agency start-ups but here’s how you win: first find a brave client..

Talking to people in the advertising world, there seems to be a feeling that start-ups face a far greater uphill struggle now than in the past.

There is a conspiracy of factors that make the jump to independence a bigger gamble than say ten years ago; recession, mega-groups, fragmentation, procurement, finance, etc. The barriers are very real and so are the the risks.. Most start-ups begin without a client and therefore no income. This can become pretty scary very quickly as those phone calls go unanswered.

One of the big shifts over the last decade or so is the decline in bigger, well-known advertisers taking the risk hiring an unknown, unproven agency. My guess is this is a combination of two realities; first clients being locked into global deals and second a risk-averse attitude. Also the fashion for wacky names might present another challenge. The marketing manager tasked with finding a new ad agency might think twice about telling his boss he intends hiring Pink Underpants who opened their doors a month ago in a mate’s attic. It’s got “You’re fired” written all over it in these worrying times.

My informants all seem to agree decision-making is taking longer and longer. Quite a few clients seem to indulge in a lot of ‘tyre kicking’ – checking out agencies – but parking the move to a serious pitch scenario, for a time at least. For a start-up this feels like the next decade, not next month. I’ve heard numerous agency founders saying “Don’t they understand we need to know where we sit in their considerations?”

The early clients for start-ups are very important in defining the agenda. Adam & Eve had a big leg up with the John Lewis business early on, 18 Feet & Rising picked up Nationwide in short order. Stalling on such signature client can lead to taking on a succession of smaller clients which can become a self-fulfilling prophecy.

Next is the work, reputations are made or lost by the early work. Even successful start-ups end up with campaigns they manage to bury at some point as their star rises.

My advice to any group thinking about starting in mainstream advertising today would be concentrate on creating a winning team that has major strengths in the core skills with nothing missed plus a serious commercial person in the mix from day one minus six months. Most conversations I’ve had with the prospective founders of a new agency reveal a major lack of experience and understanding of basic business management. This is guaranteed to lead to a crisis in month six.

Paul Hamilton (left) is a founder of a shiny new ad agency called Will:London. Paul says the admin of starting a new company was time-consuming and prolonged, with often the need to deal with issues they had never dealt with in the past. This gets in the way of the client acquisition programme. His advice is get someone to get all this done for you whilst the founders concentrate on the stuff they know.

The early ’80s (doesn’t it sound like a lifetime ago’) saw the ’Second wave’ of genuinely talented upstarts open their doors (AMV, GGT, BBH, WCRS, Lowe Howard-Spink et al) and they all seemed to pick up quality clients in double quick time. In the ’90s it was HHCL, RKCR, DFGW and Simons Palmer. Each agency added defining clients early on that shaped their futures. HHCL had First Direct, RKCR Virgin Atlantic, DFGW Daewoo (big news at the time) and Simons Palmer had Nike.

However despite the barriers seeming to be higher at the moment the industry needs talented start-ups to light a fire under conservatism. Now feels like the perfect time to create distinctive work amongst the sea of mediocrity that’s out there at the moment. But the issue of risk-averse clients isn’t helpful. The pool of brave clients has probably gone from a river to a trickle over recent times.

Wrangler appointed Simons Palmer a year after the agency started. This gave us a high profile client that provoked articles in the national press such as the so-called ‘jeans war’ against Levi’s, an early client for another start-up BBH.

I don’t think it was just a case of ‘summers were better then’, there seemed to be plenty of clients attracted by a bunch of independent chancers who were trying to create something worthy of being talked about. As well as Wrangler Simons Palmer gained BT, Nike (below) and PlayStation amongst many others. Our peers at the time also added good quality clients as we all competed like mad to beat the others with the latest high profile win.

It has never been easy to start a new agency that can make it into the top division inside three or four years but it appears to be a much tougher ask today. My view is that any team thinking about making the leap must be totally serious, properly funded, with a solid line-up covering the key disciplines.You can’t afford to leave anything to chance.

I also think the reality check of thinking about who has started within recent times is worthwhile. Check out where they are today and try to analyse why they have succeeded or failed as, sadly, several promising names have sunk without trace.

But, while the times are challenging, it is worth remembering that a one per cent share of the UK broadcast advertising market generates a very sizable agency. The issue is determining the one per cent of quality clients prepared to take the risk and be brave enough to appoint the new kids on the block.

Any brave souls wishing to start their own agency would be well advised to read Paul’s book Day 1 to Day 2555 (or 7 years in the life of an advertising agency) – Editor

This post first appeared on paul-simons.co.uk

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About Paul Simons

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Paul joined Cadbury-Schweppes in brand management and then moved to United Biscuits. He switched to advertising in his late 20s, at Cogent Elliott and then Gold Greenlees Trott. He founded Simons Palmer Denton Clemmow & Johnson in the late 80s, one of the leading creative agencies of the 90s. Simons Palmer then merged with TBWA to create a top ten agency. Paul then joined O&M as chairman & CEO of the UK group. After three years he left to create a new AIM-quoted advertising group Cagney Plc. He is now a consultant to a number of client companies. Paul also shares his thoughts on his blog. Visit Paul Simons Blog.

3 comments

  1. Avatar

    Wise words Paul.
    Too many people think they can deal with the finance and commercial side themselves, when their real talent and expertise lies elsewhere. Finance does not have to be seen as an overhead, a good commercial person can save you money, time and sleepless nights.
    It’s a functional area we at The Mellor Partnership have particular expertise in searching for and have seen how a specialist in finance can make a real difference.

  2. Avatar

    We are in violent agreement. Even the most experienced business manager can make mistakes, I certainly have, so without the experience and the lessons learned I don’t understand why people in the wider advertising community think they can start a business without the necessary qualifications. In my mini-book one of the consistent themes from people who have succeeded is the same point; get yourself a top notch finance person in the team from the beginning. We had Steve Lepley from day 1 and he swept away all commercial issues leaving us to focus on what we were best at. Goodness knows what would have happened if we had tried to do the VAT returns!

  3. Avatar

    I’ve had a few grumblings about missing out a few notable names but in my defence I can’t include everyone. However one exception brought to my attention is CHI & Partners, a big success of the last decade. Unquestionably a continuing success and in line with some of my observations; strong team at the outset, strong hirings to bolster the founders, great profile and a massive lucky bounce with Carphone Warehouse from day one. Also a highly experienced CFO as part of the team very early on. Feels like big ticks all round, hence my suggestion of analysing the winners and the not so fortunate to see if there are any big clues that might be helpful.