Letter from NY: Agency giants vs Davids — shareholders vs principles?
by Matthew Bull (@StixBull) “Stumbling around like drunks”. These were the words Lord Dan Weiden used last week at the AdAge small agency conference whilst describing today’s advertising holding companies.
Little did we know that less than 48 hours later, two of the biggest drunks – to continue the metaphor – would stumble smack bang into each other and end up in bed.
Lord Dan had spent a significant portion of his speech emphasizing what a great time it was to be an independent agency – “small, bright, energetic and provocative”.
We are, of course, at the long beginning of a technological revolution not seen since the advent of television. A revolution that spurs creativity and changes society. And to take advantage of that revolution, one needs to be hungry for change, open-minded enough to recognize its needs, and nimble enough to take advantage of it. Much like DDB (US) and CDP (UK) did back in the 60’s.
No holding company owned agency is capable of doing this – hence the need for them to continue to either 1. Merge. 2. Cut costs drastically. 3. Buy the small, bright, energetic and provocative young things. 4. All of the above.
The PubOmni merger has nothing to do with creating better advertising – no matter what Wren and Levy might say. It has everything to do with trying to create better “shareholder value”. This they will do by trying their best to retain as much revenue as they can, whilst cutting as many costs as they can.
In time, they will hope that the street likes what they see financially, which will drive the share price up, which will give them more money to buy bright young things….and the world of advertising, unfortunately, stays the same.
At no stage during the negotiations on this merger did the two principle architects say: “If we put our two businesses together we will create much better advertising for our clients”. The truth is, holding companies never think or talk about this. In all my years on sitting on the global board of Lowe, not once were we asked to present our work to the networks’ board when we made our quarterly board presentations. Networks care about three things – revenue growth, margin growth and, by extension, profit growth.
Of course, this is what they exist for, it’s what they do. They don’t do advertising, their agencies do. However, they set the ultimate agenda, and therefore culture, of every single agency that belongs to them. Meaning that the agencies owned by holding companies are beholden to shareholders, whereas independent agencies are beholden to principles.
Anyone in the world of advertising will tell you that the latter is more beneficial to our clients than the former.
So what does the future hold then? More and more our agency, and many like us, are being sounded out by large multi-national clients to work on significant brand positioning and idea-creation projects for some of their most prestigious brands – brands that have large holding company owned roster agencies. We have just completed two huge projects for two different global brands – ideas that are now being handed over to the clients’ main roster agencies to implement globally.
I had the pleasure of sitting on a panel at the conference with three of America’s finest creative talents who themselves had started agencies within the last two years, Gerry Graf, Jamie Barrett and Roger Camp. Each concurred that we actually liked working this way. At our agency, we certainly do not have the capability to manage a mega global brand at present, but we do have the capability to think and create ideas for one.
Of course, people and their brains are everything in this business, and the deluge of start-ups both here and in the UK shows that more and more people are seeking companies they can believe in, as opposed to companies they can merely get paid in. This is so important for the health of our industry – any industry for that matter.
Evidence will show that the more entrepreneurial start-ups there are in an industry, the healthier, more dynamic, it is. This is because, by their very nature, independent agencies are disruptive, inventive, whereas large monolithic organisations are the exact opposite. I watch Australia with great interest nowadays as the industry there is going through a mega-renaissance. 20 years back, it was a wonderfully inventive industry. But suddenly every bright young thing on the block – Campaign Palace etal – sold out to holding companies. The resulting malaise has taken 15 years to shake off.
Now, once again, a start-up culture is rearing its beautiful head, fuelled by the digital age. It will sweep everything along with it, to the degree that, in order to compete, even holding company owned agencies will have to up their game. In other words, create a great product..
South Africa, of course, became a world powerhouse in this business because of a multi-generational start-up culture: From Grey Phillips, Kuper-Hands and Sonnenburg Murphy (DMB&B), to Rightford Searle-Tripp & Makin, Hunt Lascaris and Jupiter Drawing Room, to Network, Lowe Bull and King James, to FoxP2, Joe Public and Gloo. This is why it remains so competitive globally, and why, hopefully, it always will.
I will never forget what Steve Jobs said about IBM – that had IMB won, had they put Apple out of business, then the computer industry would have been held back 20 to 30 years, simply because that’s what suited IBM. After all, innovation costs, doesn’t it? The same has applied in our industry and the only thing that has saved its creative bacon has been a revolution – a digital one.
Now I’d like to see an independent revolution on top of the digital one.
* Full disclosure:
- Lowe was only ever a minority shareholder throughout the time Bull was at Lowe Bull.
- Bull bought out MDC’s shares of The Bull-White House in July 2012.
Matthew Bull (@StixBull) is a partner at The Bull-White House in New York. Before that, he served as chief creative officer/chairman of Lowe & Partners/Lowe Bull and chief creative officer at Lowe Worldwide. Matthew contributes the regular “Letter from New York” column to MarkLives.
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