John Owen reports on why secondary shops seem to have such a short
It’s a familiar scenario. A large agency gives birth to a spin-off that
provides ‘a more fleet of foot approach’, ‘a more open structure’, ‘a
greater focus’ - or any other number of benefits its more cumbersome
parent supposedly cannot offer.
The fledgling struggles to break free, to feed itself on independently
won business gains. It usually survives for anything between one and
three years. Then it is consumed by its parent, either in rage at the
offspring’s inadequacy or in jealousy at its unexpected success.
The demise of Grey London’s ‘fashion’ agency, the Chelsea Partnership,
last week was one of these sad ends (Campaign, 31 May). Set up in
September 1993 to explore whether a market existed for a specialist
agency in high-end fashion and beauty advertising, the agency failed to
find one. Its client base barely grew beyond its initial Procter and
Gamble fragrances business, most of which passed back into the main Grey
agency in April.
Most agency spin-offs have higher hopes. The Interpublic Group’s Gotham
Agency is still going strong. As are Team Saatchi and BMP4. But what is
the key to their survival?
According to Chris Powell, the chief executive of BMP4’s parent, BMP
DDB, a spin-off’s chances of survival are determined largely by the
rationale for its creation. ‘The ones that don’t work are those that are
set up to avoid client conflict,’ he says. ‘There’s no reason for any
other client to have any interest in them. There is no competitive point
to them being there.’
In fact, most spin-offs are set up to service one particularly important
client of the main agency. For the transitory H. K. McCann, spun out of
McCann-Erickson in 1993, it was Coca-Cola, for the Gotham Agency it was
Maybelline in the US and Yardley in the UK.
Likewise, Lintas-i, last year’s very short-lived Lintas shop born out of
Kevin Morley Marketing, existed almost solely to handle the Rover
account. Lintas-i was unable to house client conflict, however - losing
the Jeyes account because of Lintas’s Unilever.
Some smaller agencies do successfully accommodate client conflicts: Team
Saatchi, for example, services Sun Life Assurance while Saatchi and
Saatchi has Norwich Union, although there is no guarantee clients will
be happy with such a division.
To succeed in the long term, spin-offs must do more than house conflicts
or appease single clients. Both BMP4 and Team Saatchi claim to have
Team Saatchi, created when Saatchi Business Communications and Equator,
the Saatchi group’s sales promotion arm, amalgamated last year, is now
more than the sum of its parts. ‘We have a different way of working [to
the main agency],’ Michael Parker, Team Saatchi’s chief executive, says.
‘We were set up as a total communications agency. We have developed a
new kind of team approach and offer ‘Saatchiness’ to clients who don’t
want to be part of a big agency.’
By ‘Saatchiness’, Parker means one thing: creativity. But, by adopting
the parental name, the agency also invites criticism that it is merely a
subsidiary company or the ‘integrated arm’ of Saatchis.
In fact, Parker argues, the main agency is perfectly capable of offering
integrated solutions to its clients without recourse to a subsidiary.
Team Saatchi does not share any clients with the main agency, it has its
own profit-and-loss accountability and it does not report formally to
Jennifer Laing, Saatchi and Saatchi’s chairman.
But the name suggests otherwise - as does that of BMP4, which exists to
house clients that would not feel at ease within its parent, BMP DDB.
Virginia Creer, BMP4’s managing director, has had enough of the name
problem. ‘The name BMP4 suggests we’re a subsidiary or a below-the-line
agency. We’re not happy with that so we’re very likely to change the
name,’ she declares.
Whatever you say about the Gotham Agency, its name is at least different
from Ammirati Puris Lintas or Lowe Howard-Spink. Set up out of Lintas in
New York in 1994, the London office has been housed at another
Interpublic agency, Lowes, since its launch at the beginning of last
Gotham specialises in fragrance and fashion clients. Its debut UK client
was Yardley. Unlike the Chelsea Partnership, however, Gotham has won
other accounts, including Scottish Equitable.
Nigel Sharrocks, managing director of Grey London, believes spin-offs
are often created as much around people as clients. Certainly, that was
the case with the Chelsea Partnership, he says. ‘It was really built
around Maryann [Baryone, the chief executive] and her skills.’
The path they all must learn to tread is perhaps best exemplified by an
agency which isn’t, in fact, a spin-off. But, under less enlightened
management, Leagas Delaney could have been treated like one. The hands-
off approach of its parent, Abbott Mead Vickers, has allowed the agency
to flourish in the ten years since acquisition.
As Bruce Haines, the chief executive of Leagas Delaney, puts it: ‘AMV
has always bought into companies with their own developed sense of self.
Companies like Gotham are opportunist agencies, started to sweep up
different types of business. That’s a valid way of increasing revenue.
The net effect of the AMV way is the same, but each group company has
its own, very individual, well-defined way of doing business.’