BIG VS. SMALL?

BIG VS. SMALL?

 

Having worked for Multinational Advertising Agencies in Manhattan, San Francisco, Sydney, Australia, Wellington, NZ, Taipei, Taiwan, etc. as well as small independent agencies –  I have experienced the Pro’s and Con’s in both big and small agency  environments.

When I began my career in advertising, I viewed working at Multinational Ad Agencies like: Ogilvy & Mather, Leo Burnett, DDB, Saatchi & Saatchi, BBDO, Grey, Dentsu, McCann-Erickson, Young & Rubicam, FCB, etc. as the ‘pinnacle’ of advertising and marketing achievement.

But in the late 1990’s, that all started to change. I started to discover that all my clients wanted to build deeper and more engaging multi-channel campaigns online and offline. Importantly, I could even feel my clients and brands ramping up their investments in content marketing, databases, email and digital marketing.

That’s why, I would like to explore and share the Pro’s and Con’s of where today’s smartest marketers  are investing their marketing and sales budgets.

  1. COST, INVESTMENT or PRICE?

Whenever I have this discussion with clients, CEO’s or brands anywhere in the world, the first thing that typically gets mentioned  by the clients regarding brands is the cost or price of using a Multinational Advertising Agency Vs. A Small Agency or even a seasoned Consultant.

As today’s best and brightest marketers are well-aware, at least 99% of the time, that  Big Agency’s services usually come with ‘hefty price tags’. But, as you may also know, heftier or fatter rarely mean better!

Big Agencies have far greater costs and fees associated with their business models because of these primary areas:

  • Bigger Teams – Account Management, Creative, Production, Media, PR, Digital, Software Engineers, Strategists, Designers, Research, Support Staff, PA’s, etc. (In fact, I have been involved in some meetings where we had at least ten Agency people in a client meeting! But, I have always thought, only the best presenters and brains should ever be in a client meeting or pitching clients/brands) 
  • Expensive offices – generally having excessive space, views, parking, technology, facilities, etc. Even Herman Miller Aeron chairs! 
  • Support Staff and Freelancers
  • Significant overheads e.g. flowers, food, kitchens, employee related costs, taxes, insurance, professional fees, overhead costs, indirect costs, gym membership, etc.
  • Big Agencies generally build in a profit target (Generally around 15% -25%  Note: Some try to add even more)
  • Dedicated full-time- employee costs built into a client monthly retainer fee
  • Add bonuses, building costs, marketing, travel costs
  • Corporate and local administration costs
  • PLUS, there are other hidden fees and charges too!

From my experience, I can advise that most Multinational Agencies today, still believe that the best approach to meeting your needs will be to provide their clients with a combination of dedicated core team resources, supplemented with additional project and ‘emergency’ resources as needed.

Generally, on a semi-annual basis, Big Agencies will review and adjust the composition of the dedicated ‘core team’ based on detailed discussions regarding a client’s upcoming priorities and work activities over the next six months.

Always, ask them to name the exact team that will be servicing your team day-to-day. (Too many times the A –Team pitches, and unwary clients will be service by the B or C team when it comes time to start work! Heads up! You’ve been warned. )

Bottom-line: Basically all services are bundled into what those in the large agencies commonly refer to as  ‘Compensation Metrics’ and charge them out as a Monthly Retainer to the unwary and naive.

In some cases, Big Agencies will even add ‘multiples’ of profit to their Monthly Retainers too!

If you are a ‘newly minted CEO or CMO’ – if you decide to select and work with a Multinational Advertising Agency, don’t start any conversation with them as a starry-eyed, trusting and unsophisticated client. 

Always ask upfront for a Rate Chart. This rate chart is supposed to provide you with the number of employees and their title/job functions, that the agency will provide to work on your account. This Chart should contain the proposed rates for all work performed.

  1. Global Reach and Scale

Remember, Multinational Advertising Agencies were originally established to serve clients and brands that wanted to invest heavily in a great 30 or 60-second TVC campaigns to be used internationally. (like Unilever, P&G, Coca-Cola, Nestle, Pepsi, AT&T, BMW, Mercedes-Benz, etc.)

Also, Multinationals have specialized for decades in adapting, modifying and revising TVC’s and print/press ads effectively to use overseas. E.g. campaign in multiple languages/countries. E.g. France, Italy, Spain, Germany, etc.

Thanks to a network of major Media Planning and Buying Shops globally (e.g. OMD, GroupM, Starcom, Mediacom, Mindshare, etc), smaller agencies and consultants, are just as able to provide campaigns of all sizes to companies and brands.

In fact, usually at a reduced price to larger, major city-based Agencies. Smaller agencies seldom have the same overheads and pure costs as the Multinationals.

  1. Structure

Multinational Agencies and/or Large agencies have built up effective processes over decades of  working in a global business environment. They have had the time to hone their methods, networks and ways of working and usually really understand what works and what doesn’t.

Their creative and production teams may have worked on all kinds of brands, accounts and contracts and often have won all sorts of awards internationally too. E.g. Cannes Lions, Clios, Webby Awards, Addy Awards, etc.

Picture: Cannes Lion – Grand Prix 

However, as a company grows and more levels of bureaucracy become a necessity, this can result in the client and the ‘creatives’ that work on their project never actually speaking or meeting with each other. When you are dealing with different departments and messages being passed along, ideas can sometimes get mixed up and reinterpreted.

By working with a smaller agency you’re more likely to have a one-to-one relationship with the designers, writers and strategists who are actually working on your campaign, rather than just an account executive or manager. Because you are speaking directly with the ‘creatives’ themselves, you can explain intricate concepts more accurately – with no second, third or fourth hand interpretations of what you want and expect. E.g. NO Chinese Whispers! (see below) 

  1. Agile, Flexible and Responsive

One major advantage consultants and small agencies offer today’s savvy marketer, is they are way more agile, flexible and responsive than the Big Agencies.  Although many Multinational Agencies have grown nationally and internationally, this has also added even more levels of bureaucracy!  But, this has become a necessity for them today.

Over the years, I have discovered, that by working with a smaller agency or consultant,  clients like you are more likely to have a one-to-one relationship with the designers, writers and strategists actually working on your campaign, rather than just an Account Director or Account Executive that are usually positioned as the ‘go to guys’ by the Multinational Agencies.

And, because you are speaking directly with the ‘creatives’ themselves, you can explain intricate concepts and ideas more accurately – with no second, third or fourth hand

  1. Cohesion, Stability & Integrity

The fact most people think a larger Advertising Agency is more secure, cohesive and stable than a smaller agency is a popular myth. And, having been around the industry for some 25 years now, I can confirm that myth. In fact, I think this is common element touted by many global agencies and pushed in their mission statements and vision, especially in this rapidly changing digital landscape. 

I understand the argument about size and stability and why  Multinationals often state, that there is more potential for a smaller agency to fold or close overnight, whereas a larger organization is much more likely to have greater staying power. 

BUT, only a month ago I was reading WPP crashing 10% (including Agencies like: Ogilvy & Mather, JWT, Young & Rubicam, etc) and they had to issue a growth warning due to being hit as their biggest clients e.g. Unilever, Ford, Marks & Spencer, etc. — who face low global economic growth and technological disruption — increasingly focus on cost-cutting. Additionally, in March this year, WPP stock had its biggest drop since the financial crisis when the company projected its initial 2 per cent growth forecast, the slowest pace since 2009.

But it’s also important to remember that every small advertising agency, business owner or consultant has way more at stake than large agency employees. They all have ‘skin in the game’ unlike most of the senior ‘big agency’ executives. Only the Top Management and Board Directors have shareholding and options within the Multinational Advertising World in general.

Therefore, I argue small agencies or consultants will keep a much closer eye on their bottom line, and  consistently try to increase revenue, foster client relationships and bend over backwards to make sure their clients are 100% satisfied.

On the other hand, big global agencies services are like  production lines, and can be very formulaic, grey in color, resting on their laurels. They are book smart but not street smart!

Many Big Ad Agencies have even forgotten to do a ‘deep dive’ into consumers lives, walk in their shoes and find out the core insights and truths. In fact, many sit in Ivory Towers and watch the world go by from their lofty stratosphere.

Importantly, because many of the consultants or small agency owners with the fragility of their reputation, client satisfaction can be a ‘sink or swim situation’ for smaller firms; as opposed to massive ad agencies who will likely have people consistently beating a path to their door or looking at new VC’s or Hedge Funds to invest more deeply in them.

I even have experienced first hand how many Multinational Advertising Agencies lack resources for new business including: time and money), lack focus and discipline. However they often have no idea how to prospect for clients or aren’t selective about their pitching.  AND, don’t  have differentiated positioning to win! (All major roadblocks

Additionally, three years ago we even witnessed the collapse of the $35 billion proposed merger of New York-based Omnicom with France’s Publicis. This event is  likely to lead the world’s biggest ad agencies to ‘think small’ as they try to counter the challenge from internet giants like Google.

Picture: Maurice Levy (L), French advertising group Publicis Chief executive, and John Wren, head of Omnicom Group, gesture during a joint signature ceremony in Paris, in this July 28, 2013. 

One of the prime motivations for this proposed merger deal was the competition from a host of rivals ranging from Google, Amazon and Facebook, software companies Oracle and Salesforce and consulting firms Accenture and IBM, which are siphoning off business that traditionally belonged to large agencies.

  1. Creativity vs. Flexibility

Creativity has long been the single focus of too many Multinational/Big Advertising Agencies. And, not enough attention paid to flexibility i.e. results, productivity, influence, listening, strategy, understanding and excellence in training and habituation.

I personally believe as consultants and small agencies have a ‘stake in the return’ or as Warren Buffet once coined –  ‘skin in the game’.  Consultants and small agency principals have their personal reputations, money and investment at stake – they are far more likely to increase sales, improve the brand, increase profits, measure results often and figure out what’s working and what’s not!

     7. Big Vs. Small – The Verdict?

I am not saying that you shouldn’t hire a Multinational Advertising Agency if your company or brand needs and budget allow it – but just because you need a globally scaled campaign or project, today, it doesn’t mean you necessarily need a big Multinational Advertising Agency. With the technology, social networks and telecommunications Infrastructure today – its way easier and more effective to go global than anytime in history. 

My advice? Ask yourself these questions: 

Weigh up which factors are most important to you.

Do you want a direct relationship with the strategic and creative folks working on your campaign or brand?

Do you want an established agency to lead a global or national campaign, or would you (and your wallet and shareholders) be happier with a more simplistic, modest or targeted approach?

Large organizations can be incredible and surprising,  I have learned, small agencies and some consultants have a number of potential advantages too.

OK, I have to admit it, I’m biased BUT I have spent 25 years researching, learning and testing!

END

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