Media: All About ... Independent media agencies
By Darren Davidson, campaignlive.co.uk, Friday, 27 January 2006 12:00AM
What does BLM buying Red say about the sector?
Conventional wisdom has it that the media agency sector is moving the way of the Goliaths, that the media networks dominate the market, while the smaller independent agencies plod along nobly eking out a living in their shadow.
News of The Allmond Partnership collapsing last year, after losing the BT TV business, was confirmation of this trend to some observers.
Moreover, there has only been one start-up in the media buying sector in the nine years since Christine Walker struck out with Walker Media.
This was the the7stars, launched by the former Carat managing director Colin Mills last year.
Yet, last week, BLM Media, one of the larger privately owned independents, bought Red Media - an independent in the premium and luxury brand sector - in a multi-million-pound deal. A sign that the independent sector is flourishing, or that it is in dire straits?
John Ayling, the founder of John Ayling & Associates, is in no doubt that smaller, privately owned companies are alive and kicking. "At the moment, all the new business out there is proving a real challenge," he says.
"The sector is flourishing: first, we are in control of our own destiny. And second, we are not restricted by agency deals, which the major players have used as a prop as their profit margins drop."
Ayling denies agencies are finding it hard to compete with the big buying groups, and suggests they do not even exist in the same sphere. "Anybody who is spending £100 million is going to stay in a network. Anyone who is global is going to stay in a network. But a lot of business out there doesn't have to go that route."
He admires the7Stars and believes that pundits who said it was a "brave" move fail to see that the needs of clients with modest budgets are not the same as those of the Procter & Gambles and Unilevers.
It's perhaps unsurprising that the7Stars' founder, Mills, agrees completely with Ayling. As he says: "There's a feeling that the big networks are running a bit lean and are only interested in the really big advertisers.
Was I brave to set up the7stars? Not in the slightest. The market conditions are perfect for an alternative to the network sell. There's a scarcity of high-quality, talented people in each of the major networks and that's where the opportunity is."
Both Ayling and Mills scorn the idea that the BLM/Red deal will spark a series of similar deals. Mills says: "Steve (Booth, BLM's chief executive) is a shrewd businessman. He's seen something that is going to add value to his company, so he's acquired it. It's a natural consequence of success."
This success is not confined to BLM. Some of the key independent players have now been established for up to 30 years.
1. MediaVest Manchester and Walker Media have independent credentials, but both agencies have relationships with ad groups. Publicis now has a 20 per cent minority stake in MediaVest, while M&C Saatchi has a 75 per cent stake in Walker Media.
2. Media Campaign Services is one of the original inde-pendent media agencies. Launched in 1975, it acquired another independent - Squires Robinson Gill - almost four years ago. Its managing director, Tony Sullivan, and its development director, Peter Knight, oversee clients including Warner Music, Virgin Records and Travelscope.
3. John Ayling & Associates is 28 years old. It has annual billings of £80 million and clients including Dairy Crest, Christian Aid and WKD.
4. Launched in 1994, BLM Media had 2004 billings of £79 million. Following its acquisition of Red Media, the deal increases its billings to more than £110 million. Red Media will rebrand as BLM Red.
5. Brilliant Media was formed in 1999 following the merger of the Leeds-based media agencies Media Lane and DMS. It now has offices in Manchester as well as Leeds, with annual billings of £135 million. Clients include Asda, Best Western and DFS. It claims to be the largest privately owned media specialist in the UK.
6. The7stars was established in 2005 by Mills and Mark Jarvis and Jenny Biggam, his colleagues at the Aegis-owned Carat. The agency's proposition is based on the belief that "a business that makes nothing but money is a poor business".
WHAT IT MEANS FOR ...
- Independent agencies argue that as the big networks consolidate, clients with small-to-medium budgets could feel shut out by the process and independents will find their services increasingly in demand from local, medium-sized clients.
- Networks counter that independents often lack the access to the advanced research tools and other resources that are now required by many clients.
- But, as the number of big networks dwindles to a handful, they will come under increasing pressure to drive profit and deliver a better return for their shareholders. A brain drain could result in the networks becoming overrun by number-crunchers, with the independents becoming a home for creative talent.
- The independent sector could mirror the big-network model by targeting growth, with smaller agencies consolidating to gain a foothold in new markets and improve their return to existing clients.
- The independents argue that they can offer clients specialist services and a level of dedication that the big networks - which will be slavishly preoccupied with the multinationals - just can't offer.
- On the downside, they may find it harder to compete with the larger networks in an increasingly procurement-driven world.
- But Mills says that independents can counter this with natural talent: "Clients are waking up to the fact that the role of media planners and buyers is vital to creating good communication. Talented and experienced people with time to understand what's available out there will be essential."
This article was first published on campaignlive.co.uk
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