2020 has seen a spate of new agency start-ups but how many will succeed, even survive? MAA’s late business partner Paul Simons had this to say on a similar wave back in 2014.
Is new business getting harder for start-ups?
Let’s be clear from the outset that only a few start-ups crash through the glass ceiling of moderate success in to the premier league; adam&eve being a great example.
However they are in the minority and the maths feels like it’s something like a one in ten chance of making the big time. Another hand-medown wisdom is eight out of ten new products fail so maybe it follows that, with a new ad agency, the chances are most will stall at a certain level with the odd one cracking it.
In recent times there is an interesting split of newish players between US brands opening in London and home-grown talent starting up.
From the other side of the pond we have seen CP+B, mcgarrybowden, Anomaly and Droga5 all open in London yet none figure in the new business tables in the UK. Early days for Droga5 whilst the others have had longer to make an impact.
Local talent has included Hello People, Now, Johnny Fearless, Will/London amongst others. (Check out The Making of Petplan on Now’s website, excellent).
The range of success is very variable and none have yet to crack the big one that begins to define their brand in the marketplace. Now did get tantalisingly close with the Argos pitch which would have been their Tesco (won by W&K), but a very disappointing (for them) final result in a head to head with the incumbent CHI & Partners who, in my humble opinion, should never have been forced to re-pitch.
On the US side of things Anomaly did get on to the BA pitch but pulled out at some point, probably sensibly called by Carl Johnson.
So what makes this whole business so challenging?
Well, first off, the US implants suffer from one consistent issue – none of the founders are known to the marketing community in the UK. Their stock in trade is their reputation in the US market, not this side of the pond. Names like Crispin, McGarry, Droga et al are big names in their home patch and tend to stay there. Their branch offices are there to service their US clients so the revenue flows OK which might make them less aggressive on trying to compete locally.
The question for clients then is ‘who and what am I buying in to?’
The one big exception to this rule is Wieden+Kennedy but they didn’t crack it in London for a considerable time. They opened on a deal with Nike originally. We at Simons Palmer had the Nike account but lost it when W&K opened in London. They then struggled for some time, changing staff and losing their shirts, until Amy Smith joined as MD (ex-Simons Palmer new business lady). Amy pulled off the UK Honda account and W&K started to rock and roll.
Neil Christie replaced Amy when she returned home to OZ and Neil has done a great job in fronting and leading the agency.
Then we have the local start-ups who do have reputations and contacts in client land, yet still find the process of cranking up from small accounts into the land of grown-ups gruelling.
In recent years the economy has cast a black cloud over the marketing and advertising worlds with most clients retreating to the bunker and taking a cautious approach to their business, very understandably. In these circumstances risk isn’t the obvious place to jump to. That’s when the green marketing manager reports back to his boss; Big Brown Cow have been hired, they opened six months ago and their clients are a small charity in Tunbridge Wells (where the creative partner lives), a museum in Harrogate and a Chinese restaurant in Wandsworth. Hmmm?
As the economy picks up maybe more clients will get a little braver and hire Johnny Fearless, for example, as they have both the talent and the right philosophy. Perhaps their name was a bit scary in times of caution!
Start-ups have a great deal to offer clients: energy, raw talent, ambition, owner drivers, unencumbered by corporate compliance and long winded process.
One winner in recent times has been 18 Feet & Rising. Their breakthrough into serious land was winning Nationwide a few years ago and producing distinctive yet sensitive creative work in a category known for its instantly forgettable advertising (or, in the case of Santander, very memorable work for all the wrong reasons).
Recently 18 Feet were on the Dixons review and, most recently, on the Skoda review for the European account so they have managed to be taken seriously by big players.
Many years ago, in Simons Palmer days, an intermediary said we needed ‘bottom’ to get up the slippery pole and what he meant was ‘substance’. I understood the point, clients want to feel they are in good company with their peers. Winning clients such as BT, PlayStation, Virgin Atlantic et al provided that elusive quality of substance which in turn generated inbound new business enquiries.
So it probably has been a tough time for new businesses to win clients spending proper money on proper advertising but things may be about to change as the green shoots turn into summer. A report yesterday in one of the broadsheets says personal income has climbed back to the levels pre-recession so maybe the upward virtuous circle of confidence will cascade onto Adland.