I like independence. I like independent freelancers and I like independent clubs. Whenever an independent creative club merges into a chain, I’m still a little disappointed. Apparently prefer the money over the customer.
Because – at least my brain thinks – an independent club prefers to work with the very best and most fun specialists for its customer. While a club within a group must cooperate with the available specialists in that chain for its customer; so that the chain brings in as many odd jobs (money) as possible. And that it is not always the nicest or very best specialists, does not make much difference for such a chain.
I was wondering if my brain is right. So I kind of googled the pros and cons of independent clubs. I’ve looked for cross-chain comparisons. And also… how will independent parties emerge from the crisis?
(Little is written in the Netherlands about independent marcom specialists vs chains, so that’s why a selection of international articles.)
The two biggest advantages of a chain, or large agency:
- The convenience for the client; the one-stop-shop. “A single source removes an enormous amount of work, coordination and brand policing off the client’s list of responsibilities.”
- Guarding your brand in all communications. “The value of a big agency is that it is the keeper of your brand across all paid media.”
But now that more and more advertisers are opting for a (small) in-house agency, they can easily take over these two tasks. The in-house marking manager coordinates all suppliers. And the in-house creative director monitors the brand in all means of communication. So how much value do these two advantages still have?
“The Association of National Advertisers concurs, with a recent survey showing that 78% of advertisers now have an in-house creative-production arm.”
Freedom versus big
The choice of an independent club to join or not to join the chain is – apart from the pecunia – a difficult dilemma:
- Ultimate freedom, but growing and scoring large customers remains difficult.
- Less freedom in exchange for growth and larger customers.
“If it’s a boutique and wants to stay a boutique, then being independent might be the best thing for you as you can win your own bread and be happy in your own world. But if scale is your game and you would like to explore working with the best global brands, then an agency network might be a better choice. ”
Financially as strong as a chain
Financially, it doesn’t matter if you are an “independent” or part of a network. Although a boutique agency (as independent clubs are also called) has less overhead, on the other hand it lacks the financial buffer of a chain. Here a piece from 2017:
“We don’t have phenomenally high overheads to worry about like the big boys may have, but conversely, we have no sugar daddies to come rescue us if we need”
But yes, how strong is a chain’s financial buffer even if the major networks were struggling before the corona crisis?
“This timing could not have been worse. Two of the holding companies, WPP and Publicis Groupe, had lost revenues even before COVID19 and the other barely grew. ”
The two biggest drawbacks to major
- Forced marriages.
“Having more resources to work with sounds great, but not if I lose control and have to deal with all the rest of the baggage that comes with being part of a corporate beast.”
- They go for the money, not the customer.
“They have financial goals often determined by a holding company, investors or other parties not personally vested in the employees or clients.”
Summary of my Google
Groot has had his best time. That was already predicted by PMC in 2016: “Large advertising agencies are starting to lose their luster…. These types of agencies are hard to sustain nowadays, and only the best of the best remain. ”
Independent clubs are better; they are more flexible, faster, more personal, more customer-oriented, more budget-friendly, more creative, more specialized. That is well summed up in this article.
And Forbes also has a nice list of why “big brands” should consider working with small players:
Here some nice quotes
“In my experience, high-performers prefer to remain specialized and work best in smaller firms and teams.”
“No matter how you slice it, or what side of the fence you’re on, independent PR offers opportunities for individuals and agencies alike. Tapping this workforce will, I believe, become the norm ”
“Most independent businesses are run by people – not by boards, not by stockholders, not by algorithms. And so you get a different kind of care and quality in their product because their work is a reflection of themselves. ”
“There is a strong case for independent agencies in a fast-evolving market where communications leaders are increasingly demanding agility, innovation and deep expertise in new areas of comms”
“We are most concerned with the quality of our work as this is what differentiates us from other larger companies.”
“Smaller agencies are more flexible and creative in what they can offer a seller,”
And what about the crisis?
A large survey was conducted among 250 “boutique” agencies. The respondents themselves are gloomy. Up to 20 to 50% of agencies might go bankrupt
However, the same study concludes that the biggest blows will come from traditional business models: “The most affected segment of businesses, of course, will be the traditional business format.”
Campaign US asked experts about their prediction: “Which shops do you expect to come back stronger after the coronavirus outbreak passes, and why? Independents? Mid-size? Boutique? Holding companies? Media? Creative? ”
The answers vary. Some votes for the chains:
“Strong networks will become stronger, they have more means to leverage their capital to ride the next one year… .. Independents, especially media-based or small, with clients mostly on project basis will struggle because they will run out of cash.”
“The agencies who currently have the deepest pockets and most diverse client list will have an immediate advantage to survive in the short term.”
Others give the independents more hope:
That’s not to say that independents won’t play a key role in the “comeback.” They most definitely will. We’ve seen time and again how tenacious, flexible and scrappy these shops can be in adapting to marketplace disruption. ”
“Independent, and highly regarded midsize agencies are likely to absorb the body blows better by lowering margins.”
If we ignore the crisis, the future lies with independent “boutique” clubs. It remains to be seen who is more sensitive to the crisis: the large agencies or the small clubs. Maybe a lot of little ones won’t make it. But sooner or later, if the crisis is over, they just come back; stronger than ever. And that is my prediction.
By: Pascal Boogaert.