London’s adland has been seized by a new spirit of adventure, with a swarm of start-ups, breakaways and second-string agencies, but is there enough business to go round?
Last week, Edinburgh’s The Leith Agency poached Saatchi & Saatchi and Leo Burnett senior executives to run its new London office, which has contributed to the Scottish agency winning £80m of new business this year.
Just as energetically, Abbott Mead Vickers.BBDO breakaway Miles Calcraft Brigginshaw Duffy (MCBD) has won numerous clients, including Radio Times, Breathe, Thorntons, and BT Syntegra, since its launch 15 months ago. Then there’s Bartle Bogle Hegarty’s first breakaway in 18 years, Soul, which is now working for soft drink giant Coke; and Ogilvy & Mather has set up a second-string agency, Adworks, to handle client conflicts and fast-turnaround work.
Some believe consolidation is driving the trend, with the big agencies becoming victims of their own consolidation. They say ad executives looking for a creative environment and clients looking for creativity are not finding it within the big groups. Although others believe the entrepreneurial dot-com spirit could have rubbed off on more entrepreneurial admen, craving independence.
But advertising, a notoriously cut-throat competitive business, is so close to saturation that finding a unique selling point for a new agency is almost impossible.
The point is not lost on MCBD managing director Helen Calcraft. She says there is no gap in the market but consolidation is driving start-ups: “The big boys are now too enormous while the mid-market, creative, independent agencies have disappeared.
“As a smaller agency we can be more nimble, flexible and informal. It’s time for a change, we’re the most conservative, reactive industry in the world,” she adds.
But the new agencies’ quest for change will not be easy. According to a recent report by financial analysts Plimsoll Publishing, one in four agencies is at high risk of failure and the size of the agency does not determine its success.
AAR managing director Martin Jones says: “Most, if not all, of the new agencies will remain. If you are prepared to build a good business, there is definitely a place for quality.”
Jones estimates there has been a 15 to 20 per cent increase in the number of ad agencies in London over the past 15 months.
“But it will be more competitive than ever and success doesn’t come overnight,” warns Jones. “It’s taken HHCL 12 years to become a top ten agency.”
He believes a division between agencies handling national and multinational business may occur – brands with smaller spends are worried about getting lost in a large agency.
Jones adds: “The biggest criticism people have of agencies is that they are fantastic at understanding consumers, but no good at understanding what motivates clients. Most clients couldn’t care less about agencies, apart from their own, until they need a new one.”
But if the start-ups survive, competition for clients will intensify. A decade ago, the premium agencies were the big ones with long clients lists. Today, big does not necessarily mean premium, and success does not necessarily mean being part of an established global network.
New agencies will give clients more choice. As Jones says: “There is not one premium agency any more – a whole variety of agencies of different sizes appear on pitch lists. But to compete for the big accounts against the AMVs of this world you need a London presence.”
This is exactly what Edinburgh’s The Leith Agency has realised. Since opening its London office at the beginning of the year, the Leith has won Bass’ £10m Carling, the £30m pan-European launch of the Honda Civic and £40m worth of Honda Motor Europe business.
The Leith chairman John Denholm says: “Technically there’s not a huge justification for opening in London. We can handle national and international business from Edinburgh – we won Honda here.
“But from a business development point of view, we’ve got to be where the action is. Over the past five years, we’ve built the Leith brand awareness and image, but now we need to convert that into a stream of national business.”
Last week, the agency revealed its new London line-up. Ex-Saatchi managing partner Jeremy Pyne will be managing director, while former Saatchi head of art John Messum and ex-Leo Burnett creative director Paul Silburn will be joint creative directors.
Pyne explains why he’s leaving Saatchi after 14 years: “I wanted to run something my way, something I had built, rather than walk into an agency of 100 people.”
His sentiments must match those of other seasoned admen who leave big agencies for start-ups, although Pyne’s “start-up” already has a history, a strong creative reputation and client list.
Pyne believes The Leith’s London success is down to “getting a solution quickly and simply, in creativity without the painful process. This is what is so frustrating about a big agency”.
He adds: “A lot of agencies are consolidating and client business is consolidating, so you would think there would be fewer agencies, but new breeds of business are evolving that don’t necessarily need the traditional structure.”
The key question is whether these agency remakes – start-ups, creative hot-shops, breakaways, regional offices – will create a renaissance in advertising?
Denholm says: “There’s never been a more important time than now – after years of integration, introspection and the emergence of new media – to recall that advertising is about simple, powerful ideas. It’s time the industry made a comeback.”
That comeback may have started. Not led by the lumbering industry giants, but by smaller, more flexible, nimble and energetic new agencies – for every WPP there are a dozen Leith Londons ready to shake up the status quo.