While French wine was flowing at Cannes in late June at the advertising industry’s largest gathering, Leila Abboud and Jennifer Saba of Reuters published an interesting piece about the vast number of major corporations that have put their marketing business up for review during the past 12 months.
The piece noted, “The reviews are an unnerving prospect for top agencies WPP, Omnicom, and Publicis that are already under pressure from their customers to create innovative campaigns across websites, apps and social media instead of traditional text and TV — and on a far smaller budget in a post-financial crisis world.”
Innovation and cost — today it’s where the rubber meets the road.
The Reuters story reminded me of a pitch for business that we lost to FleishmanHillard during the first six months of founding Elasticity in 2009. Afterward I was told by the prospective client that we did not win the business because “my boss likes the panache of Fleishman’s name.”
Welcome to being a boutique agency. We compete with large agencies, predominantly owned by resource-rich holding companies, with one arm tied behind our backs.
But just like college basketball has been democratized by a wealth of smart coaches — and thus mid-majors now regularly advance to the NCAA Final Four — innovation and price have leveled the playing field for smaller agencies. Indeed, great ideas are not akin to scale. In fact, just the opposite.
“I’ve worked with large agencies and small- to medium-sized agencies, and prefer the latter,” one Fortune 500 corporate communications chief told me. “Larger agencies were always great at providing really nice PowerPoints, strategic thinking and being process oriented. However, the small- to medium-sized agencies were the ones that produced results and creative, break-through-the-clutter initiatives. Isn’t that what we want as clients — results that break through the rest of the noise out there?”
Innovation, you see, tends to flow more freely from the startup mindset, and it is very hard for a large organization in any vertical to shift paradigm and turn on a dime — even if customers are demanding it. It’s simply too uncomfortable. For a smaller agency, however, innovation comes more naturally. We’re used to hustling, doing things differently — hell, taking out our own trash — and more.
“Not only do companies want to pay less to their ad agencies,” wrote Abboud and Saba in their Reuters piece, “…they also want to make sure that their agencies really know how to help them succeed in a world where consumers spend less time watching television and more using a dizzying array of websites and apps via their mobiles.”
This is the sweet spot of the nimble — where small is good. It’s why today we see goliath corporations like Boeing, Purina and Centene setting up innovation groups and housing them inside startup incubators like the Cambridge Innovation Center in St. Louis (CIC) — so they can learn how to be nimble from those for whom it is ingrained.
Then, of course, there is cost, which makes the blindness that some CMOs demonstrate in being infatuated with large agencies all the more perplexing. Independent firms need not compensate a WPP, Omnicom or Publicis for every dollar that comes in the door. Hence, boutiques can price services more effectively. To wit, whereas I was billed out at $300 an hour as a vice president at FH, I am billed out at $150 as an Elasticity partner. That’s significant.
Innovation and cost — they’re not just buzzwords. They are without question democratizing marketing communications and should, at least in concept, level the playing field as boutiques and Goliaths battle in the same arenas for the opportunity to work with global brands and organizations.