"People tend to assess the relative importance of issues by the ease with which they are retrieved from memory – and this is largely determined by the extent of coverage in the media."
So writes Daniel Kahneman in Thinking, Fast and Slow. It’s an example of the availability heuristic or confirmation bias.
Looking at media coverage of the advertising agency sector over the past couple of years, you could perhaps forgive your brain for thinking we’re all doomed: transparency, in-housing, the ongoing digital revolution, the impact of the duopoly, global network agencies restructuring, shares prices tumbling…
Beyond that, the reporting of the agency sector doesn’t seem to reflect the current market.
A look at the annual School Reports in Campaign shows the same old faces occupying all the top spots. And with only one digital agency, Essence, featuring in the top 50 media agencies table, you may feel as if UK agency land is stuck in a 20th-century time warp.
And yet, for clients and investors who look beneath the surface, a very different picture is emerging: vibrant start-ups, technical and commercial innovation, new agency models, percentage growth in the double or even triple digits.
Sir Martin Sorrell’s S4 Capital posted its first-year results last month. Following the acquisitions of MediaMonks (£260m) and MightyHive (£115m), the business posted a first-year pre-tax profit of £20m on income of £105m – an impressive growth rate of 46%.
Meanwhile, Brainlabs has sold a minority stake to private-equity company Livingbridge. The performance marketing agency is growing at a similar rate to S4 Capital, has about 200 employees and is valued at north of £50m. Founder Dan Gilbert has stated his ambition to build the biggest advertising agency in the world.
Jellyfish, where I am a board director, has grown consistently at 45-50% for more than five years and, in the past six months alone, has made two acquisitions and opened offices in India, Israel, Japan and South Korea.
From humble beginnings in Reigate, Jellyfish is approaching 700 people across almost 20 offices.
There is a formula to these next-generation agencies. They are born in digital. Their roots are often in search. They integrate creative, media, data, technology and content. They have never been involved in murky trading or mark-ups.
They are adaptable to clients' needs and open to helping brands balance in-house capabilities with external expertise. These businesses are strongly connected to Google, Facebook and Amazon, and as such they are closest to the shifting centre of gravity in the media world.
Many major UK advertisers will never have heard of them and none is listed in Campaign’s top 50 media agencies, despite having higher digital billings than many on the list.
Of course, other agency models are available. Amazing talent still exists in more traditional structures and networks.
Let’s not let a new kind of myopia cloud that view. I spent 11 years building a challenger media agency in VCCP Media, which I’m proud to see has made the list and continues to grow.
But if we dig a little deeper and look beyond the obviously flawed metric of traditional media billings, there are some incredibly exciting digital agency start-ups out there.
Social Life is a creative social agency based in Shoreditch. It has a small team of fewer than 50 people but has been appointed by Netflix, Apple and Amazon.
Filament is an expert in applied artificial intelligence. Crossover Comms specialises in location-centric media. Anything is Possible is looking to disrupt the media agency model. True Up is a growth consultancy punching well above its weight in headcount.
The start-up agency scene is thriving, both inside and outside the capital.
I am hopelessly biased. Not only because I also sit on the board of Social Life as well as Jellyfish but because, having been on the inside, as an agency founder and board director for the past 15 years, the reality of the market in the UK is very different to the impression you might form from the outside looking in.
For both clients and investors, there is much reward in looking beneath the surface – and beyond the league tables – to uncover this new generation of rising agency stars.
Paul Mead is executive board director at Jellyfish, non-executive director at Social Life, advisor at Vitruvian Partners and a member of the Promote UK board