It is time to reclassify agencies. Large, medium and small may have suited the business for many years, but it has never been a definition related to agency skills. The mega-merger trend is making it less relevant as a guide for advertisers seeking an agency which is right for them.
In the past, many agencies which would have been called small are now calling themselves specialists, and being known as such. Particularly with the advent of new media agencies, small is beginning to drop out of the advertising language. There is nothing wrong with that. We all have a right to claim specialisation if it suits us, but there is a much more important change further up the line.
Ever since agencies became public companies, market forces have been dictating the way the business has developed, sowing the seeds of the agency mega-league. Add in the blurring of national identities and the more recent growth of telecoms and you have, according to the large agencies, an incontrovertible case for size.
Consolidation, which is said to signal the end for medium-sized media agencies, never ceases to fascinate the marketing and media pundits, but they tend to ignore one important factor.
As the big agencies become bigger, they move further away from the domestic market. Yet a lot of advertisers have no ambition to compete seriously overseas. Many significant advertisers in, for example, leisure, entertainment or retail have no need for a multinational approach or the trappings of an international agency. These UK advertisers may not be major spenders by comparison with, for example, the Unilevers of this world, but they still spend millions. They are the majority of advertising spenders and they will always want the best possible value for their advertising pound.
What is needed is a change of definition that reflects skills of the mega- and medium-sized agencies. MMS figures indicate that the ten largest media agencies handle 49 per cent of UK consumer advertising spend. In five years, an even higher percentage is likely to be handled by an even smaller number of mega-agencies, perhaps no more than six, each geared to servicing multinational advertisers.
But that is precisely why the future is bright for medium-sized agencies which concentrate on the UK market. UK-centric advertisers are going to be less interested in agencies whose priorities lie in worldwide planning. They will want to go, as many already do, to agencies which know the most about the UK because they “specialise” in it.
Some UK advertisers are fighting back against the mega-media trend. If you are a business seeking growth through UK market success, rather than international activity, you can get left out of the equation. An effective, UK dedicated agency that is neither distracted nor bored by playing at home is going to be far more likely to do a good job for you.
Forget large and medium. The logical classification for the future should be multinational and UK, reflecting the real priorities of the agencies and their clients.
Mike Sell is chief executive of Total Media