Should agencies use incubator model?

campaignlive.co.uk, Thursday, 09 May 2013 08:00AM

Ad agencies incubating start-ups is nothing new – some (such as Albion) have been doing it for years. As well as helping to ensure that they stay ahead of competitors and are tapped into the entrepreneurs forging new businesses in the white heat of new technology, there is also the chance to take a financial stake, at minimal risk, in fledgling companies that could become big. Mother recently announced that it would be supporting a group of start-ups.

The initiative, called Mother at The Trampery, will see the agency charge its clients for exclusive access to the entrepreneurs working inside the London workspace. It’s a twist on the traditional model of incubation but shows that some agencies are developing the strategy. It also followed the IPA’s creation of The Bakery, which sought to nurture and stimulate entrepreneurs in the technology space. While the real return from most of the investments has yet to be fully felt, agencies are taking it seriously. So, is the partnering of start-ups a future business model for agencies that are seeing their other, more traditional, revenue streams under threat?

Suit

Ian Pearman, chief executive, Abbott Mead Vickers BBDO

"No agency can bring all of the capabilities it needs in-house, so partnership is ever-more critical. But, as ever, the ‘how’ is everything. Thorny issues such as the sharing of IP, resource, money and client contact must be agreed at the outset. Agencies need to be really clear as to why they are entering these partnerships in the first place. It should be because they make the work better, and clients pay more for better work, so this is the only sustainable model. Partnerships have to be additive to the core agency product – if they are a bolt-on without a real role for the agency beyond brokerage, clients will seek out those partners directly."

Suit

Andrew Peake, managing director, VCCP

"I once worked for a client based in shared office space. He shared the same floor as an IT consultant and across the corridor was a haircare company. My client’s computers didn’t work and his hair was awful. He used his neighbouring companies because they were convenient. He was surrounded by a ramshackle bunch who were brought together by their need for office space. They had nothing else in common – no shared culture, methodology or ambition. So, the partnership model is certainly a future model for agencies but, for it to work, there needs to be a carefully blended combination of skills and a co-ordinated approach to working with clients."

Suit

Jason Goodman, chief executive, Albion London

"It’s no secret that Albion has spent the past ten years focused on working with entrepreneurs. We invite fast-growth start-ups into this space and collaborate with them, even if they aren’t clients. We share knowledge, explore how they work and learn best practice. We often introduce them to our larger corporate clients and explore product trials and joint ventures. Collaboration and helping to enable the start-up scene comes with being part of Tech City. I’m interested to see how Mother and The Trampery’s collaboration works out. It’s being done with really good intentions and no doubt there are corporates that will pay for access to the right sort of tech talent."

Suit

Richard Warren, joint chief executive, DLKW Lowe

"Definitely. Not only is it a future business model but it starts to address the existential question: ‘What is an agency for?’ Assuming they believe that their purpose is to enhance the relationship between their clients and clients’ customers, agencies should be interested in offering anything that serves this purpose. And given that agencies can’t rely on the primacy of advertising in the client/customer relationship any more, they clearly need to widen their range of capabilities on offer. Not all of these can be owned and operated by agencies. Hence the need for partnerships. And, crucially, experimentation."

This article was first published on campaignlive.co.uk

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