During a downturn when advertisers are looking to rationalise spends to make up for muted volumes, advertising agencies are one of the worst hit. One would imagine that the creative hot shops, not affiliated to a large network with scale at hand, would draw the short straw. But they inisist that it is not so.
Data from Spatial Access, which tracks account movements as part of its work in improving effectiveness of media use of clients, show that around 30-35 per cent of accounts that have moved from January, 2013 till July, 2014, has been won by independent creative agencies. From 2008 onwards, a lot of senior creative hands left their network agencies to forge out on their own. We take a look at how the independent creative agencies are working around the challenges of scale and positioning themselves.
Scale vs intuition
Kamble says that some of the next generation of business-owners are even reviewing the previous one's agency choices. His agency has won Raymond in January, which had the same tagline for nearly 15 years. It also has Mahindra and Titan Xylys.
Subhash Kamath, managing partner, BBH India (standalone BBH was acquired by Publicis), says, "Some clients require the people, geographical presence and the different services that network agencies offer. When they come to an independent agency, however, they are clear about their objective. It could often be because they don't need a lot of time to be devoted to the work at hand so it would be a project or are looking at a fresh start, away from partners who have become very close to the problem and hence, can't give a new perspective."
Built with partners
Kamble says, "For specialised services such as digital and activation, clients realise it is time to work with partners rather than go with a default option. This way they can choose the best-in-class."
Santosh Padhi, co-founder & CCO,Taproot, which made its transition from a hot shop to being part of a network (in 2012), says, "Being part of Dentsu has given us access to research, software, a legal team. But earlier, we could still go to an independent research outfit. Some clients would want an all-rounder while some would want specialists."
Advertisers willing to work with agencies based on projects have been the wind beneath the hot shops' wings. Taproot moved from working on a project-basis for Airtel and Pepsi to having them on board as commissioned clients.
Kamath says, "Last year or two there has been pressure on the whole industry where everyone has turned cost conscious. During downturn, clients naturally turn to business result-oriented work so they gun for sharper work that will deliver sales. So, project-based work helps at time."
Taproot, which Padhi says retains its independence ("Why would Dentsu remove the very reason they bought us for?"), has around 33 per cent of commissioned business (where clients pay for media buying and agencies earn commission on that), 33 per cent of retainer clients (who pay a retainer fee for all creative work; model considered to be more progressive and more immune to undercutting) and 33 per cent of project-based work.
But network agencies have also been pulling up their socks, acquiring some of the hot shops to get a ringside view of what works for them (Dentsu)or populating their top management with young talent (Leo Burnett).