Getting in too deep?

In June divers travelled to the Isles of Scilly to investigate the shipwreck of HMS Colossus, which sunk in 1798 on the final leg of her return voyage from the Mediterranean where she participated in Nelson’s campaigns against Napoleon.

Old shipwrecks capture the imagination of children and adults alike, and the diving adventure will be broadcast by Time Team at Christmas or early next year.

Despite the continuing interest from television, only 0.01 per cent of the UK population regularly take part in any diving activity, whether treasure hunting or scuba diving, which means the market for related products is tiny.

Scubapro UK, which has manufactured diving equipment for 35 years, relies almost entirely on direct marketing (DM) to communicate with its customers and a network of 140 retailers, so it needs an agency with an intricate knowledge of this niche business.

Five years ago marketing manager Mick Robertson was approached by Scot McKee, a keen diver who was convinced his fledgling DM agency, Birddog, could work with Scubapro. Birddog now creates an annual DM campaign for Scubapro promoting a package of diving products sold at a discount; and each year the campaign is refined using customer feedback.

Robertson has seen Birddog grow as an agency and take on much bigger clients than Scubapro, such as British Airways, Miele and NTL. But he will remain loyal to McKee until he feels Birddog has expanded to such a size that it can no longer serve the limited diving market satisfactorily.

The personal touch

“If there came a time when I could not get to speak to Scot when I needed to, and I had to deal with just anyone in the agency, there would be a problem. It is important I can phone him anytime because he understands diving and the company,” says Robertson.

Indeed, when agencies grow as businesses in their own right, one unfortunate side-effect can be that clients are unable to access the creative skills of the founding partners or directors as easily as they have in the past.

Senior agency people often find themselves spending their time solving problems relating to staff or tax issues, for instance, rather than campaign planning – the danger is clients may consider taking their business elsewhere.

Get it right from the start

Alan Timothy, chief executive officer of data consultancy and DM agency Rocket Science, says problems usually occur because the right business systems were not put in place when the agency was formed.

“A creative director and an account director might take a couple of clients with them and set up a new DM agency and, although they know all about costing a job, they may have a narrow view of [running a] business overall such as tax, VAT, bills and employment law,” he says.

Olly Raeburn and Andy Annett founded Liquid Communications three years ago and now employ 18 people. They say the warning signs are usually brightest when an agency is evolving from a small to a medium-sized business.

“There is danger you can spend too much time on the growth of your own business and not enough on your clients’ needs,” says Raeburn. “The difficulty for partners is how to balance remaining on the creative side with running the company. You must learn to delegate and realise you do not have to be involved in everything that goes on.”

Among Liquid’s clients is Virgin Mobile and its marketing manager, Marianne Hewitt, is sympathetic to the view that clients cannot expect to have the creative juices of their DM agencies’ top people on-tap, 24 hours a day.

“When an agency experiences expansion and a managing partner moves upwards, and work is delegated to a more junior member of staff, the client must try to build up a trust with that new person or all you do is knock their confidence,” she says. “If we brief a junior account executive we will not expect the senior partner to be involved creatively, but if it is a big money promotion we would demand their input.”

Agencies that have grown to a manageable level have done so by ensuring those in charge remain in touch with the day-to-day running of the business, even if their creative involvement is increasingly hands-off.

Jonathan Clark, chairman and co-founder of Clark, McKay & Walpole, says that before he formed his company almost eight years ago, he tried to learn from other agencies’ mistakes. He avoided choosing partners where a clash of egos would be inevitable and from the start brought in people who could take responsibility for non-creative areas such as finance and personnel.

The company claims it is expanding at about 20 per cent a year and reports a gross profit of £6.5m. Its aim it to reach the £12m mark and possibly break into the top-20 DM agency list.

Growing pains

“Some agencies grow too fast and lose their culture because they bring in the wrong people and the wrong clients. We have grown from five people to 85 and try to involve clients in how the agency develops by being aware of their longer-term marketing strategy such as data planning,” says Clark.

Talk to many of the larger agency directors and you will hear them reminisce about the days when their operation employed less than 50 people and when, although they might not have made as much money, they probably enjoyed their job more. Paul Woolf, managing director of Cramm Francis Woolf, is one such man who says clients need reassuring that the culture and management of their agency will not change for the worse as the company gets bigger.

“I’m a great believer in management’s role as the creator of disciples, responsible for imbuing new recruits with the company culture. Governing the way things are done now does not mean ignoring how things were done in the past,” he says.

Mike Tildesley, marketing director at More Than, the direct insurance brand owned by Royal & SunAlliance, says being able to spot agencies with potential early on can benefit clients in the years ahead.

CCHM, formerly Camp Chipperfield Hill Murray, is a five-year-old specialist financial agency and was one of More Than’s roster agencies before it was awarded the £20m advertising account earlier this year when the client decided to switch from Ogilvy & Mather (MW March 7).

“It is always a concern if an agency expands too quickly and the pace of growth outstrips its ability to recruit quality people and service clients effectively,” he says. “However, we are CCHM’s biggest client and we hope that we will always have a special relationship with them.”

CCHM managing director Paul Gordon reiterates how important it is that the staff working within the agency can see the business growing around them. “As we expand, we attract new clients and this instils confidence, convincing us to try new things. Of course, the opposite is true too, because if the agency does not grow you begin to doubt yourself and whether the service you are offering existing clients is right,” he says.

A new colossus

Earlier this year EHS Brann became the UK’s largest DM agency with an annual turnover of £63m and a staff of more than 300 following the marriage of Brann and ehsrealtime – itself the creation of an earlier merger of direct marketing agency Evans Hunt Scott and digital media consultancy Real Time.

EHS Brann managing director Mike Horne acknowledges how difficult it is for the top creatives in an agency to continue servicing clients to the level they have come to expect – and are paying for – when management roles change.

“The reality is that the senior directors from the merged companies cannot give clients the same amount of time they perhaps did in the past, but their creative input will be more intense. We have to ensure we make the best use of the top managers’ time,” he says.

One agency that has expanded to about 80 people over the past 11 years is Craik Jones, which still has two clients on its books from its first year, First Direct and Land Rover, an account still headed by chief executive officer David Watson. Rather than trying to expand too quickly Watson has set himself the target of winning one major account each year, and last year it was Orange.

“If you start as a creative agency and you have aspirations to expand you must ensure you remain strong in the planning area so you can always bring consumer insight into the business,” he says.

“Planning and creative work have remained our core strengths and we have avoided setting up outside businesses, such as a Web agency, that might have been profitable but which would have been a distraction.”

Land Rover’s marketing director, Colin Green, says Craik Jones’ growth during the last decade has not caused him concern so far, but he says agencies must never take their clients for granted.

“We have grown up together but if circumstances changed and we did not get the same attention or our creative needs changed we would consider moving agency,” he says. “Over time, the personalities of the people at Craik Jones have evolved but if we were not happy about something, we would always go to them first to discuss our concerns and give them the chance to put things right before we considered leaving.”

Flying high

Another DM agency proud to have kept a high-profile account on its books for years is Tullo Marshall Warren, set up in 1987 with four staff and which recruited British Airways as one of its first clients. Today it employs more than 130 people and handles all BA’s DM business after the airline went through a period of agency consolidation earlier this year.

“The secret is not to be complacent with long-established clients and ensure everyone in the agency understands the importance of keeping the creative fresh,” says new business development director Richard Marshall.

Clients might not only be tempted to look elsewhere when their agency is growing, but also if there are signs the agency is struggling and contracting in size. No client wants the responsibility of being the only large account on an agency’s books, for example.

Mutual understanding

At the Royal Mail, distance selling director Derek Fairhurst is responsible for promoting the direct mail to the top-500 advertisers. He uses a roster of DM agencies, OgilvyOne, Joshua and Proximity, and says clients and agencies must understand the pressures that each other is under.

“It is not uncommon for agencies to downsize or adjust their own resources as marketing budgets are put under pressure, but changes in client teams are equally disruptive,” he says. “If changes at an agency mean my account is under-resourced then I will weigh up the alternatives, but moving from agency to agency carries its own risks because it takes time for a new account team to come up to speed with your account.”

Most clients are glad to see their agencies grow, as long as the service they pay for and have come to expect does not suffer. However, if they feel the senior partners in their agencies are less interested in their creative needs than they once were, they are likely to want to move on.