When an agency boss leaves after less than a year, speculation about the future of the agency is routine. But Matt James' departure from Naked's spin-off Naked Ambition, where he was a founding partner, created an extra buzz because of the cachet attached to the Naked name.
Naked still dominates the growing communications planning sector, but new entrants including Rise Communications, Experience, Tonic and Good Stuff, in which OMD has a minority stake, are adding weight to it. And then there is The Ingram Partnership, which, after buying Unity, offers communications planning as part of its service.
It's hard to judge the relative success of many of these businesses because of the lack of billings figures available and the paucity of information in their Companies House entries.
Luck plays some part in the success of any new venture and Naked Ambition has not had much of it. Garry Lace, the former Grey London chief executive, was on the brink of committing the agency to taking a stake in the launch, but he left in March before a deal was signed. James' departure, whether encouraged or not, is the second blow it has endured in its nine-month existence.
But Jon Wilkins, a partner at Naked, says it will not close. "Ambition is going to stay around," he insists. "The situation with Matt hasn't worked, but we do not see that as an indication that demand is abating. We are in more conversations with different partners than we have ever been." Wilkins adds that there are six potential partnerships in the offing for Naked.
Partnerships, the backbone of Naked's business model, have been key to its success. When it launched four years ago, a significant chunk of its business came via referrals from Mother, which has a minority stake in Naked. Last year, it launched Naked Inside with Clemmow Hornby Inge and it is set to ratify a joint venture with Fallon.
The type of financial backing Naked had at launch can make all the difference, Simon Mathews, Rise Communications' founder, says. "We are a green-field start-up, so it has taken us longer to establish ourselves. Starting from scratch is a much longer road. If someone takes a 25 per cent stake in you, it does not make it 25 per cent easier to make your business, it makes it 100 per cent easier."
Mathews says of Ambition: "For the sake of its staff and clients, Naked needs to be clear about how it replaces the Grey connection."
Winning retained business is another challenge for strategy-led agencies, although it is perhaps less problematic than it used to be. Mathews says every project-based piece of business Rise Communications has won has transformed into a more permanent account. Wilkins claims that 80 per cent of Naked's business is retained, while both Experience and Good Stuff say that most of their clients are retained too.
The biggest challenge remains selling strategy-only solutions to clients.
Andrew Stephens, the co-founder of Good Stuff, says: "Some clients can be converted, but it takes longer to see others and to convince them to pay for separate planning."
Planning agencies get around this by arguing that they are truly impartial because of their distance from the buying process. They are often quick to claim that traditional media agencies are lazy old dinosaurs that just want to make commission on large television and press deals.
But the small planning agencies are now facing competition from media and creative agencies that are aping their language and services to avoid being cut out of the process. Critics counter that while planning agencies might be big on ideas, they do not have vital resources such as proprietary research or optimisation tools.
Mark Holden, the executive planning director at PHD and the former managing director at Rocket, suggests that being away from the buying process can bring its drawbacks. "There is a danger of becoming disengaged from the market if you are working in a small strategy agency. Media owners are innovating all the time. And if buyers are interfacing with media owners, they can bring that to the planning process."
He says planning agencies might struggle to attract repeat business because a killer strategy may unwittingly rule out the possibility of future interaction with a client. "There is no planning or buying work that can keep you linked in with a client. You can always refine and oversee the communications planning, but after a while, the job is complete," he explains.
Holden also thinks that people management is an issue. "Finding people to deliver and keeping them motivated in a flat structure is quite difficult," he says.
And loss of senior personnel is felt keenly. Mathews admits that when his fellow Rise co-founder, Andrew Goulborn, recently left the agency, it set it back a few months. But perhaps more crucially, as these agencies are still evolving, potential exists for internal discord about their direction and offering, how they market themselves and whom they recruit.
Recruitment is a massive issue for the planning specialists as the majority of recruits are from the very agencies that the strategic-led shops like to claim are living in the dark ages.
In general, the communications planning sector is in good shape but perhaps more clarity from the various players on their propositions would help it to grow further.
THE BURGEONING COMMUNICATIONS PLANNING SECTOR
AGENCY FOUNDERS LAUNCH DATE
Michaelides & Bednash George Michaelides, September 1994
Graham Bednash, Tony Regan
Naked Communications Will Collin, John Harlow, August 2000
Rise Communications Simon Mathews, October 2002
Andrew Goulborn (now left)
The Ingram Partnership Chris Ingram bought Unity August 2003
and brought its founders
Andy Tilley and Ivan Pollard
Tonic Tim Elton, Geoff Seeley December 2003
Experience Greg Turzynski, James March 2004
Whitmore, David Reid
Good Stuff Ben Hayes, Andrew Stephens June 2004