Whether it’s Wunderman Thompson or Ogilvy dropping all of its agency brands and bringing them together under one P&L, it’s clear we live in rapidly changing times. As some of the world’s biggest agency networks consolidate their offerings, I’ve been asked more and more lately: where does this leave the independents?
As someone who built their career in the networks before jumping into the world of independents, I see a huge opportunity here. But with that come some new, genuine threats to the agency model. Let me explain.
We have to start with looking at why the big networks are consolidating. While there are obvious financial benefits to bringing multiple agencies under one roof—think merging HR functions, departments, and other cost savings—there’s a bigger reason. In today’s market, clients are demanding more specialist skills and diversification than ever before.
Whole new disciplines have opened up, especially within digital, that clients need and can’t (or don’t want to) develop in-house. Yet at the same time, budgets and client teams are shrinking. What the networks are doing so well is filling this void. After all, it’s still easier for clients to deal with a single retained agency they trust, rather than a whole range of agencies for each new—and ever-changing—discipline or channel that arises.
The result is mergers like VMLY&R, a “new brand experience agency” (their words, not mine). But it makes sense in today’s market. Which client wouldn’t prefer a one-stop shop with a pre-prepared buffet of specialties ? And which network agency wouldn’t jump at the chance to organically cross-sell their services across their entire client portfolio?
But what this shift acknowledges is the importance of specialization which is exactly where many independent agencies come into their own. Most have niche product offerings and specialist capabilities around SEO, analytics, mobile, e-commerce, CRM and social.
Across the region, we’re seeing specialist independent agencies starting to compete with the largest networks and getting onto pitches that would’ve been unimaginable only a few years ago. As client needs have become more specialized, it’s levelled the playing field. Not in terms of scale, of course, but in terms of specialist capabilities.
And there’s a huge opportunity here.
Many specialist agencies are hungrier and more versatile than their integrated counterparts. They are happy to work on a project basis, where others prefer more traditional retained accounts. And they’re much more likely to offer only what the client needs rather than the whole suite of services on offer. This agility and versatility come with strategic and financial benefits for today’s savvy clients.
For all of these reasons, the future looks bright for specialist agencies. But we need to be in no doubt that when we’re both eating each other’s lunch, we could see even more competition between the indies and network agencies.
Whether this leads to a further consolidation of agency brands is yet to be seen, but one thing’s for sure: the renewed focus on specialist capabilities has already changed the industry landscape forever.
Luke Janich is CEO of RED²