Your editorial “Next Round of Consolidation” (MW March 8) highlights the opportunities and pitfalls that size brings for global marketing services groups as they try to preserve shareholder value.
However the moves orchestrated by the advertising giants are often defensive. They serve only as an Elastoplast to cover the cracks that are present within the industry today as a result of an economic slowdown and, more specifically, a reduction in advertising expenditure.
So while many will want to be cautious at this time, history would suggest that it is precisely when there is a “chill” in the macro economic climate that the brave can really make their mark – especially in non-traditional advertising disciplines. Therefore I would suggest that it is those independent agencies “Standing apart” (Direct Marketing supplement March 8) that will be the real winners by the end of this decade.
These claims are not a prophecy, merely an observation. Over the past 30 years new independent businesses have started and flourished at times when stock markets have fallen and the economy has slowed down. It is these businesses that are subsequently acquired for huge sums by the monoliths when the cycle picks up.
The reason why we see the emergence of new businesses in these periods is that when the squeeze hits, the big agency groups in turn squeeze their assets. Since their only assets are people, it is at this time that talented people start to look at other outlets for their talents – ones that are not governed by corporate accountants.
It could be a vicious cycle but I would rather view it as a virtuous cycle of regeneration. The time when the pursuit of creativity and service take precedent over money and margins and, more importantly, people can express their own personalities and give free reign to their talents.
So as we go through the inevitable next round of consolidation among the large agency groups, let’s keep a focus on the exodus of talent this generates and the new wave of businesses that will inevitably follow.