Crisis triggers wave of ad agency start-ups

The unique circumstances of the Covid-19 pandemic allied to recession have seemingly laid the groundwork for a series of “disruptive” start-ups to emerge.

Other: spin-off shop led by Kyle Harman-Turner, Paulo Salomao, Metz Bryan-Fasano and Oberman
Other: spin-off shop led by Kyle Harman-Turner, Paulo Salomao, Metz Bryan-Fasano and Oberman

Amid the gloom of the coronavirus pandemic and economic recession, a flurry of start-ups have emerged claiming to disrupt the traditional agency model.

In October alone, there were six high-profile agency launches. These included Mother’s spin-off shop Other; ScienceMagic, a co-venture from ex-Guardian Media Group chief executive David Pemsel and The Communications Store founder Julietta Dexter; Friendly Giants, an agency co-founded by Omnicom Media Group’s Sam d’Amato and named after Roald Dahl’s titular character in The BFG; and Platform, from former M&C Saatchi chief creative officer Justin Tindall and chief marketing officer Kate Bosomworth.

Former Grey London creative chairman Adrian Rossi and ex-Domino’s chief marketer Emily Somers also joined a start-up independent network, called The Constellation Collective, while former MullenLowe Open executives Ant Hopper and Si Goodall launched a customer experience consultancy The Ninety-Niners, catering to “the 99%”.

Other fledgling ventures are bubbling away, too, from new creative shop Motel to the colourfully named Orange Panther Collective, founded by four former London agency pros.

Alex Buxton, the IPA’s head of new business, who oversees its Accelerator programme for up-and-coming agencies, says he has seen “a huge amount” of start-ups across the industry.

Dual motivations

Two distinct motivations seem to be driving these ventures, according to Victoria Fox, chief executive of AAR: “There are those who did it because they always wanted to work for themselves and spotted a genuine offer, versus those who started because something forced themselves into that decision, like redundancy or a restructuring.”

In May, New Commercial Arts, the start-up conceived by Adam & Eve founders James Murphy and David Golding, made headlines when it opened its doors at the height of lockdown, in a seeming anomaly. However, the business had been long planned.

Numerous established agencies and holding groups have been hard hit by Covid-19, with furloughs and redundancies across adland. Yet these conditions may now be propelling many down the entrepreneurial route, Simon Thurston, founder and managing partner of The Constellation Collective, explains.

“More people feel inclined to start their own business when jobs are scarce,” he says, adding that his venture was in the works before the outbreak of Covid-19. “If you feel your current role is under threat, or don’t have any opportunities on the horizon, you might feel more motivated to set up your own shop. Some are calling it ‘necessity entrepreneurship’.”

Adland’s current entrepreneurs join a long tradition of businesses throughout history that have sprung up during previous recessions, such as Airbnb, which launched during the 2008 financial crisis, and Disney, which was founded during the Great Depression.

Such entrepreneurs recognise that crisis can lead to opportunity, Fox says: “Covid and the recession are bringing hardship and real negativity to a lot of people and businesses, but it does open up opportunity.”

She adds: “Opportunity comes out of changing periods, and we are at a point of inflection.”

Start-ups, which tend to be more agile, may also be better placed to adapt to upheaval, Buxton notes. “At the moment, larger agencies could possibly struggle more, because of challenges around flexibility and office location,” he says. “These are two things for start-ups that are strengths – they don’t have large office costs and can be flexible.”

Sarah Oberman, strategy leader at Other, echoes these views. She says that the best thing about a start-up being born in 2020 is that they have the opportunity to “bake our business model by leaning in to challenges, versus trying to go back and retrofit solutions to an old model”.

Many clients also have an appetite to work with start-ups when they, too, are under financial pressure. “What you aren’t paying for with a start-up is all the overheads of an established, heavily branded agency. It’s a good way to get very clever thinking at a realistic cost,” Fox says.

A change of client approach

Murphy has also observed this trend among clients, noting that NCA has so far had bigger new-business opportunities than when he and Golding were at the same early stage with Adam & Eve. Part of this is likely down to the duo’s reputation and previous success, but difficult market conditions may also be compelling some marketers to rethink their approach and consider different types of agencies, Murphy argues.

“Rather than becoming conservative in the current climate, it’s making them a bit more adventurous,” he says. “It feels like clients are more prepared to put interesting challenger start-ups on their pitch lists and also look at lists that are broader in terms of the disciplines that they bring to bear.”

In one instance of this, it is understood that the recent Vodafone global review included design shops and brand consultancies as well as more traditional creative agencies. NCA went on to win the business.

A common thread among many of the recent start-ups is an ambition to disrupt the traditional agency model. Such trends were already under way with differently shaped launches in recent years, such as Uncommon Creative Studio and Wonderhood Studios, but Covid-19 is accelerating an exploration of new ways of working. “All the start-ups that have real success have got a much broader proposition around taking the brand through all customer touch points,” Fox says.

For example, ScienceMagic, Pemsel’s venture, touts its capabilities in “strategic science, creative magic and digital experience” and is “trying to disrupt the ad agency model and the talent agency model,” he says. He is wary of using the word “agency” to describe his business, because “when we talk to clients, if you open up with ‘we are an agency’ it starts to set you on a narrow course – it is a language of delivering a one-dimensional offering.

“The new companies launching are not just baked into one communications avenue, because the world is different. There has to be a different mindset about solving client problems and helping brands navigate this difficult period.”

Like Pemsel, other recent industry entrepreneurs, including Tindall, are keen to move away from old-fashioned views of the agency model. But Fox points out: “It doesn’t matter what you’re called. Just redefine what you mean by agency.”

Even if they launched from necessity, the entrepreneurs that can build success in the long term will be those that can meet a true gap in an industry embattled by this year’s crisis, she says. “They’ve got a hunger, they’ve spotted an opportunity in the market that they can pivot to and they have broader views on how creativity can be leveraged.”

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