Starting a lab in an agency is the new black

Numerous ad agencies have set up accelerator programmes, incubators and innovation wings, and they’re starting to reap the benefits. This year, they’re showcasing their prowess to the industry with a slew of submissions that are helping the startup ecosystem stand out. The startups they are supporting are allowing the agencies representing them to win a nice haul of Lions (Hammerhead Navigation, BioRanger, The Pursuit)

In a talk titled 'StartUp' on day two of Cannes Lions 2015, RGA’s chief growth officer, Barry Wacksman, spent time talking about the role the RGA Ventures accelerator program has played and how it has impacted the DNA of RGA as a company. He attributes four key success indicators to the accelerator programme:

• Awards: More than 10 Gold Lions have come to startups from RGA’s accelerator programme.
• Talent retention: Smart people who think in an entrepreneurial way want to work with smart people who think like entrepreneurs; injecting these people into a startup or accelerator unit helps retain talent.
• Industry connections: Barry listed a total of nine venture capital funds (Google Ventures, Qualcomm Ventures etc.), which have formed affiliations with RGA Ventures. This has allowed them to raise twice the average round of funding for their startups.
• Diversified investment strategy: Being a seed-round accelerator allows you to invest at optimum pricing and increase various lines of business lines organically, without specialist knowledge.

I’ve simplified my observations into four key lessons:

1. R&D first, investment later

Advertising is one of the only industries which doesn’t invest tonnes of money into R&D. Before you plunge head first into setting up incubators and labs in an agency, make sure you are looking at it as an R&D vehicle. It needs to be seen as a cost centre and not a profit centre. The outcomes can be monetised, but the unnecessary pressure of transforming the staff into a profit centre will kill it.

2. Focus on clients' categories (versus being a dreamer)

It’s easy to diversify and get carried away in supporting numerous areas beyond the agency’s core expertise or knowledge base. I feel it is important to innovate first and foremost with the advertising agency’s client categories. Your startup will exit at some point in time, but working with clients and their needs will result in a longer term working relationship and rewards.

3. Connections bring you talent

Recognise that you are moving into an area where, as a company, you have zero expertise and you are competing in a space where there are multitudes of companies that have more experience. It is crucial that we tie up with the right universities, technology companies, external incubators and factories. A recommendation from them about your venture will bring talented people to your fold.

4. Ready access to the right money is better than investing your own money

Let’s face it, there is tons of hot money floating around all the key startup capitals. It’s not just about having the biggest, deepest pockets anymore—but complementary skills and deals that can be brought to the table. It is an inner circle in the venture world, one that your venture will need to penetrate very quickly. If you don’t have much dough, most governments have money to JV with you; just look carefully at the terms.

Cannes Lions 2015 marks the start of a new trend where agencies crowdsource ideas, partner with startups, accelerate them and win awards. Based on what we’ve seen and heared here over the last few days, I think we’ll see this accelerate faster over the next year, further blurring the lines between product ideas and communication ideas.

Joseph Chua is head of client servicing and head of digital at J. Walter Thompson Singapore

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This article is part of the Campaign Innovate series, a collection of articles that examine the way innovation, startups and technology are affecting the advertising and marketing industry.

Campaign Asia-Pacific has also launched the Campaign Innovate competition, an event that aims to provide a platform for Asia-Pacific's startups to pitch to some of the world's biggest brands. 

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