How can a small agency compete with the big guys?

Recently, John Zeigler, Chairman and Chief Executive of DDB Asia-Pacific, India and Japan, wrote a letter to the editor of Campaign Asia (Inbox, March 2012) which was a response to my blog story “Small agency vs Big Agency” — and the rise of new-generation independent agencies.

Mr Zeigler’s response was not without its merits, though perhaps a bit on the defensive.

No question, big advertising agencies offer several benefits—and great agencies like TBWA, DDB, Ogilvy and BBDO do some awesome work—and there’s no doubt that I am a fan of much of it.

The advertising and marketing world today remains typically focused on the big guys and for good reason. Big name brands have the most to spend, and their dollars are highly coveted by agencies vying for their business.

On the other hand, there are many clients that aren’t multinationals and few have the big budgets like the big brands do to market their companies.

For the big brands, marketing is a bit of a different game. They have social currency. Many of us know the company and what it stands for; just mention a big brand name like Apple, Pepsi, BMW, Coke or Nike and a logo or brand personality pops into your head.

Many small to medium sized companies have very little social currency, and if you mention their name, you likely have to explain what they do. Most big agencies won’t deal with these smaller companies as the ROI isn’t big enough. Until the rise of the digital age, the small company had limited options for advertising due to budgetary restrictions. Now the Internet has opened the flood gates.

“Unfortunately, I believe the future for small agencies is little more than small opportunities, which is a bit of a shame in an increasingly smaller world of connectivity and linkage.” noted Mr. Zeigler in his defense of big agency networks. “Small, boutique agencies can, and always will, bring to the table big, mountainous ideas. However, unless these agencies are ‘connected’ in some shape or form, the challenge to deliver these ideas and experiences across the globe is even bigger.

“Network’s have a breadth and depth of resources that a small agency could never challenge. For a small agency, the future is collaboration and connectivity. And ultimately, making small agencies not so small.”

To the contrary, I think that agencies of all sizes must be collaborative and connected—and this has nothing to do with the “future”. Whether you are an agency born in the 1980’s, 1990’s or 2000’s, you have had to be collaborative and connected to make your business successful—it’s just that some of the tools (technology) have changed and innovation is speeding up.

More and more,  smaller firms are going up against some of the giants in our industry, and even more now consider themselves to be in competition with larger agencies. What's really made it possible for smaller, independent firms to compete with the big ones, is technology. And with the Internet, it no longer makes a difference where a firm is located.

While Mr. Zeigler’s notion that “Network’s have a breadth and depth of resources that a small agency could never challenge”, owner Chris Kyme of KymeChow in Hong Kong recalls that in his network days, “Just being part of a global network does not necessarily guarantee clients great service and product in every market. Some agencies are great in some countries but weak in others. It’s inconsistent.”

Whether you are a big agency or a small agency, at the end of the day, the difference for any client is really in the people, and the work they produce. Clients want the people that bring the experience, knowledge, insight, creativity and contacts that will make a difference in that organization’s results and bottom line.

I have helped manage and grow local Asian offices of some of the biggest agencies in the world, and one of the world's smallest — my own — and I can tell you that big is not always better (though it's certainly the more expensive of the two). Yet, I admire both for what they are.

While smaller agencies might not always be as organized as the larger ones, I think they’re still just as capable as their bigger counterparts when it comes to delivering results because many of them today are collaborative—bringing in the experts they need to complete a project. The secret sauce, as I noted above, is the talented people we hire. That’s how agencies become successful.

Take for example, Droga 5.  After six successful years, Droga 5 is no longer a small agency.  For Chris Kyme,  the founder of his own independent firm,  Droga 5  "is an independent agency, winning awards on solving real problems for big clients and sticking up two fingers to convention".

Reporting on Droga 5, Atifa Silk, editorial director for Campaign Asia-Pacific, said:  “David Droga (founder of the agency) believes advertising is under duress – too many people compromising to make a dollar and too few staying true to their ideals. No industry has worked harder at being lazy, he says. Droga wants change. He doesn’t believe the network structure works, and is adamant that his agency, for better or worse, will stand up for what it believes.”

As I noted in my blog, it’s easy to understand why many high-ranking creative people are jumping ship out of constricting bureaucracies to open their own small shops. It's a trend of which we're going to be seeing a lot more. Several of the ones that I know have left the big-agency world because more and more of their time was spent pitching new business and less on the day-to-day creative work.

I continue to believe there will always be room for both the big and the small agency. The small agency is coming into its own. For the last two decades we’ve seen an increasing number of large marketers shifting, or even eliminating their relationships with big agencies. Marketing is undergoing dynamic changes that are forcing brands to view customer and client relationships through a new lens. Rare is the single agency that can help brand marketers to deliver fully on that promise. Instead, many CMOs are developing a deep roster of agency partners that are nimble, accountable, and possess specific skills that drive results.

In his letter to the editor, Mr. Zeigler notes the benefits of taking business to a big agency network.

Big ad agencies are great. In their own little way. So I won’t repeat the benefits he chose to mention.

I would, however, like to note the benefits of taking business to a small agency:

1. Small agencies are small and nimble enough to respond rapidly to the needs of a marketer whose business operates on Internet time, and happily break a few of the "rules" along the way to advance a brand's interests.
2. Politics in small agencies is often minimal, so there can be more energy and focus on the client's interests.
3. Big clients who give small projects to small agencies quite often are adrenaline boosts to their creative people, allowing them to spread their wings and fly with something that has national brand name recognition.
4. As it is with technology companies, large agencies move more slowly. Small agencies don't have layers of client approval with which large agencies typically have to contend.
5. Small agencies have less to lose when they offer edgy thinking. Great advertising most often happens when you take risks.
6. Small agencies don’t have to answer to fickle stockholders. And the heads of most holding companies have never created an ad in their lives.

If I could offer some advice to small agencies it would be this: Don’t be defensive when trying to explain to clients why you can do the same things with fewer resources. Take the offensive, and explain why smaller is better for this client’s particular needs. Don’t disparage the competition; simply point out your superiority.

A final point: you may notice that some of the most satisfied and happy people in the ad game today have chosen to work in small agencies, and many, for less pay.

Why is this?

I think Steve Jobs summed it up well when he said: “Being the richest man in the cemetery doesn’t matter to me … Going to bed at night saying we’ve done something wonderful… that’s what matters to me.”

Mike Fromowitz

OCTANE