GLOBAL ADVERTISING: Start it up

Despite the economic doom and gloom, many start-ups have managed to make their mark during desperate times. So could now be the right time to launch an independent agency? Campaign considers five of the biggest advertising markets and their start-up cultures.

UK: SINGLE, BUT NOT FOR LONG

"If the chemistry between the partners is there, then there's no reason why the relationship shouldn't go from strength to strength," the IPA director-general, Hamish Pringle, says, stressing the importance of relationships to those individuals who launch independent agencies.

Doubtless they don't stay independent for ever - HHCL & Partners is now HHCL Red Cell, and Mustoes sold a minority stake to Hakuhodo in December. But the vitality of those independent agencies operating in the UK means there must be some method in the madness of launching an agency in a recession.

The UK has a particular strength when it comes to launching start-ups.

Take Abbott Mead Vickers BBDO, which has spawned entrepreneurial children in the form of Miles Calcraft Briginshaw Duffy and Campbell Doyle Dye. Or take Bartle Bogle Hegarty, where the founders of Soul and Mother once worked. Or TBWA/London, which started life as GGT at the end of the recession in the 70s and spawned Clemmow Hornby Inge some 20 years later.

An industry full of ambitious individuals feeling stifled in global organisations, which also set tough financial targets, cheaper start-up costs and cost-cutting clients looking for new ways to make an impact on consumers can make a recession a kinder environment for new businesses.

The battle to maintain independence is a tough one in a climate where networks are now keen to spend cash to diversify and grow; buying an established start-up and its clients is the easy option. But it makes virtually everyone a target. However, such deals are not always a foregone conclusion, as Leagas Delaney found when its multimillion-dollar deal with the Canadian company Envoy in 2001 collapsed. Acquisition deals disintegrate because of market conditions and client losses.

Right now, the prime targets ripe for picking include M&C Saatchi, DFGW and Soul. And it is interesting to note that all benefit from the strong relationships - both internally and with their clients - that Pringle claims are so important. - Camilla Palmer

US: SMALL IS BEAUTIFUL

During the 90s, it was common for New Yorkers to find themselves being elbowed aside by young-ish executives as they exited the giant agencies of Midtown and marched towards SoHo to set up their own shops.

How things have changed. War and recession have made those who stayed in the world of corporate marketing look like geniuses of economic forecasting.

Conventional wisdom suggests that now is the worst time to start anew in the US advertising business. But, in the type of pretzel-like logic that's often expressed on this side of the Atlantic, some are saying that this also makes the opposite proposition true.

In January, New York's Jerry Della Femina - raconteur, restaurateur and the founder of Della Femina Rothschild Jeary & Partners - provided financial backing for LevyTenny, a tiny new shop dedicated to the notion that big clients could benefit from the low overheads and nimble responses of a boutique. The agency has already won its first account for the frozen yoghurt brand TCBY.

The billings are small, but that's the point, according to Rich Levy and Jim Tenny. They claim clients are tired of seeing their smaller brands get lost within holding companies, which staff the account with cheaper, second-tier executives to keep bottom lines and stock prices buoyant.

Other boutiques that have snagged assignments on large accounts during the recession include California's Siltanen/Keehn, which won Gateway; New York's McGarry Bowen, which took Verizon's corporate image tasks from Lowe & Partners; Boathouse in Massachussetts, which got a TV gig from Merrill Lynch; and Connecticut's The Acme Idea Co., which wrenched Gillette's Duracell business from Omnicom's BBDO.

Not everyone thinks the picture is rosy, however. "In tough times, marketers are risk-averse," Alan Gottesman of West End Consulting, a New York ad agency analyst, says. "They certainly wouldn't want to give their business to a company that might not be around in six months."

Della Femina is unfazed. "Everyone should have their own ad agency sooner or later," he says. "You should start a new agency at least every one or two years." - Jim Edwards

FRANCE: WHERE THE NICHE SURVIVE

"Times of economic crisis see a rise in the number of independent agencies, because everyone is being made redundant," Philippe Legendre, the director of the AACC (the French advertising agency association), observes sardonically.

Legendre reckons that of the 3,000 or so communications agencies in France, between 700 and 800 are independent entities. "Of course, most of these are outfits with fewer than six people, or one-man bands. Some won't survive the year."

In Paris, the general consensus is that there are only a handful of successful independents left. These include Famous, the embryonic agency set up in 2000 by Serge Uzzan, the former managing director of Alice (now Lowe Alice); the TV specialist Business & Associates; and Jean et Montmarin, which is coming up to its 20th birthday.

"Times are tough for an independent," the president, Hubert de Montmarin, confirms, still licking his wounds after losing the multimillion-euro Yoplait account. "Consolidation and globalisation are taking away business - but, paradoxically, are also creating opportunities. Entrepreneurial clients are once again seeking the flexibility, value-for-money and dynamism of the independents."

Meanwhile, Business & Associates has survived with a unique positioning.

It specialises in cheap eight-second commercials with jingles that swoosh into your brain and lodge there. Mention the fast- food brand Flunch to French people, and they will start singing the song devised by Business.

The company's strategy is to wait until the summer holidays in August - when the cost of TV slots plummets - and then saturate the airwaves.

"Going niche is a good way to survive," Legendre agrees. "But if you're setting up right now, you need genuine creative talent. Clients are looking for a fresh approach, at a more attractive price. If you can provide that, you will flourish."

An alternative is to create a faux independente - an agency with the hip appeal of a small shop, but the resources of a worldwide network.

The star in that department is LeG, the business set up by Christophe Lichtenstein and Gabriel Gaultier with the backing of Young & Rubicam.

Its work for Eurostar France - including one of the few witty radio campaigns in advertising history - has won it notoriety and awards. And its international reach gives it a huge head start. - Mark Tungate

JAPAN: DON'T EVEN THINK ABOUT IT

If you're looking to set up an independent agency right now, run, don't walk, away from Japan. That's the verdict of the 14-year Japanese advertising veteran Michelle Kristula-Green, the president and representative director of the Burnett-D'Arcy joint venture, Beacon Communications.

For anyone looking at going it alone, a faltering economy in the grip of a five-year slide and a market dominated by the big three of Dentsu, Hakuhodo and Asatsu do not make an attractive proposition. "General market conditions are bad - it's a depressed economy with low growth and a tremendous softness in consumer spending. Companies have a lot of pressure on them, and are cutting their spending," Kristula-Green says. "And where in previous years there were events such as the World Cup which made clients feel that they should up their spending, there's nothing like that right now."

Even the major international networks frequently struggle in Japan, as the grip of the domestic monoliths is so tight. Plus, clients are becoming more demanding, Kristula-Green says: "There's a lot of pressure on fees. There's more accountability than there was in the past. People are trying to get more for less. But it's still a very high-cost country. Setting up a company, getting offices, hiring people - they're all still very expensive."

The one possible niche for smaller agencies is as sub-contractors providing services, such as creative, to the big players, a common practice in Japan.

But even that niche is already occupied by numerous shops led by people with many years of local experience. - Richard Lord

GERMANY: FORTUNE FAVOURS THE BRAVE

Uncertain times have not hindered the launch of some independent shops. Although 2002 was another tough year for smaller agencies in Germany, there have been enterprising ad people who took the plunge of launching their own shop.

Springer & Jacoby's breakaway team Feodor von Wedel and Arwed Berendts launched Saint Elmo's in Munich "in the midst of the crisis and without any clients", von Wedel remembers. Now the agency has 19 clients, including Bulthaup kitchen furniture, GQ and Glamour.

Gerrit Schwerzel named his new Hamburg-based agency DMGDW, short for "Dem Mutigen gehort die Welt" (Fortune favours the brave). He will be content if he manages to break even this year. Karsten Greve, who once worked for Jung von Matt and Zum Goldenen Hirschen, is not overly optimistic about his and Heike Unger's young Berlin agency Pilot Fish, although they have won business from BMG Ariola Classics. "But if we can make it now our prospects will be good when things get better," he believes. Christian Monzel is another former Jung von Matt executive turned agency owner with his Hamburg shop NGGK. Monzel envisions new opportunities for new independent shops and Benno Heider, a top management consultant for communications agencies in Hamburg, agrees. "In today's changing markets, clients are open to working with the smaller, cost-effective agencies," he believes. - Friedhelm Gieseking.

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