CLOSE-UP: LIVE ISSUE/AGENCY CLOSURES - Adland suffers its first casualties of the recession. Further losses are likely if the economy fails to pick up soon

It's started. The first have fallen. Slap bang in the middle of a

much-hyped period of economic downturn with a market now saturated with

agencies, it was only a matter of time before casualties appeared. Now,

within a week, adland is waving farewell to the first - the Advertising

Brasserie and Cave Anholt Jonason.



The agencies were different and both give different reasons why their

end has come.



Cave Anholt Jonason, the London-based agency aimed at the global

services market, has closed after only eight months trading.



The agency, launched in October last year, was set up by Marc Cave, who

resigned as the vice-president of the Lowe Group to be a founding

partner along with Simon Anholt, the former chairman of World Writers,

and Joakim Jonason, previously the creative director of Paradiset

DDB.



All three founders took the decision to press the destruct button but

rather than blame the recent downturn they cited personality differences

as the cause of the split - in other words, they couldn't stand working

with each other.



The Brasserie's reasons were more traditional. Mischa Alexander, one of

four founding partners (Dave Shelton, Chris MacDonald and Liz Whiston),

simply states that there are too few clients being fought over in a

market that is agency saturated - in other words, lack of cash.



The idea of CAJ was to produce international campaigns that were

sensitive to all the markets that they appeared in, but by operating out

of one office with an international creative team at a substantially

lower running cost.



On paper, this is a good idea. But, as Paul Briginshaw, the creative

director of the successful start-up Miles Calcraft Briginshaw Duffy,

says, if you don't get on with your partners, you're screwed.



"Chemistry between partners is absolutely vital. We have had a very

successful two years, but there are dark days and there are moments when

things don't go right and what you rely on is your strength in the group

and solidarity between the partners," he says.



Martin Jones, the owner of the Advertising Agency Register, agrees: "One

of the first things you really look for beyond what they are offering

is: do they get on with each other? If they don't, it's never going to

work. Clients buy teams of people."



When the Brasserie launched it was hailed as a major industry innovation

that opted not to work with television production companies.



Instead, the Brasserie acted as its own TV production company, producing

and directing its commercials. Its best-known work includes the Ronseal

"Does exactly what it says on the tin" ads and the "Define your own

universe" campaign for Line One, starring Malcolm McDowell.



But, as the Advertising Brasserie has learnt the hard way, this

proposition has a few fundamental problems with it.



Stef Calcraft, one of Mother's partners, explains: "Just being

project-based is difficult for agencies - it's difficult because you

find that when you meet a new client you need to get a level of

understanding about a market and a business that unfolds over time and

brands are long-term entities. They need nurturing and stewardship and

it's hard to do this on a project basis."



"The great campaigns exist over time," he continues. "They are not six

months in and six months out. Look at Levi's at Bartle Bogle Hegarty,

Orange at WCRS and Saatchi & Saatchi and BA - those relationships got

better because brand understanding got better."



Simon Clemmow, a founder of the new agency Clemmow Hornby Inge, agrees:

"Maybe the traditional way is the best way to do it. What you need is

clients paying fees, given that the biggest cause of business failure is

cashflow problems. If you've got clients just paying on a project basis,

as soon as the project stops the cash dries up. Also, presumably, they

are often hired by clients who don't feel they can commit to an ongoing

fee. Continuous pitching must be very wearing and very inefficient."



"We do much prefer fee-based clients although we do have some project

clients," Briginshaw says. "We can project into the future a bit

more.



We can hire with more confidence when we have contracts. It's better for

everyone - you can build long-term relationships and understand the

clients."



Alexander has suggested that in downturn periods project-based agencies

should do better because they are cheaper and short term.



Unfortunately, Rupert Howell, a founding partner of HHCL & Partners,

disagrees: "It's not that clients want cheaper above-the-line

advertising in a recession - it's just that they want less of it.

Projects and experiments are the first to go, long-term stuff survives.

When the Brasserie went independent, it was easy - it was one of the

first young, new agencies. Now there is competition from Mother et al.

It's hard."



Alexander has realised that for project shops to survive in harsh

economic times, they require more resources - the agency backing and

cash that the Brasserie had up to four years ago, when operating within

HHCL.



This is a hard time for independent agencies to be out on their own and

Jones, for one, thinks there are more closures on the horizon. "I won't

be surprised," he says. "You get a sense from some agencies where you

can hear desperation in their voices, which cannot be a good thing."



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