Start-up health check: how are new agencies that launched during Covid faring?

Agencies including Motel, ScienceMagic, Platform, and Other reflect on opening their virtual doors during the pandemic.

Start-up health check: how are new agencies that launched during Covid faring?

When 2020 is written into history, it will show that, despite the many challenges of a global crisis, it was a record-breaking year for UK start-ups.

Often driven by redundancy and a sudden need for income, entrepreneurial spirit led to the creation of 770,000 new businesses in 2020.

This was a 30% rise compared with 2019, with an average of 64,000 businesses set up each month in 2020, according to online B2B payment firm Tyl by NatWest. 

Adland had its own part to play, with a surge of new shops popping up in the latter half of the year.

There was Mother’s spin-off, Other; Platform, from former M&C Saatchi chief creative officer Justin Tindall and chief marketing officer Kate Bosomworth; and ScienceMagic, a venture from ex-Guardian Media Group chief executive David Pemsel and The Communications Store founder Julietta Dexter.

Other notable entrants were Motel, co-founded by McCann WorldGroup alumni, former ECD Lee Tan and former chief client officer Rob Smith, and Friendly Giants, co-founded by Omnicom Media Group’s Sam d’Amato, and former Dare, ITV and BBC creative Gavin Leisfield (pictured below, left to right), while ex-Grey London creative chairman Adrian Rossi and ex-Domino’s chief marketer Emily Somers formed a “micro-network”, The Constellation Collective.

New Commercial Arts, which was launched by James Murphy and David Golding, the co-founders of Adam&Eve/DDB, also deserves a mention. They first had the idea for their brand creativity and customer experience agency at the end of 2018, when they quit their old shop and served out a long non-compete agreement, but opened NCA’s doors virtually only in May 2020.

Whatever the inspiration behind last year’s wave of new agencies, the extraordinary nature of the pandemic provided a tough incubator stage for some of these start-ups. However, whether supported with external venture capital funding or growing organically, they should emerge from the global crisis proud of their hard-fought credentials.

Martin Jones, managing partner at pitch consultancy AAR, says: “Starting an agency during lockdown is a bit like learning to drive on the M25. If you can succeed now, then you should be well placed when ‘normality’ returns.”

It’s true that, historically, many businesses to have launched during difficult times, such as The Great Depression (Disney) and post-recession (Airbnb), have achieved great success, with the right people and offering, and emerged stronger after a downturn.

Although the human cost of Covid, in terms of job loss, illness and death has been horrific, as Adrian Rossi, creative partner at The Constellation Collective, points out: “There could not have been a singular better time to do a start-up. It has given an economic opportunity to do things not dreamed of beforehand.” 

Rossi’s network of creators, producers and digital specialists operates without a central office, preferring to base itself in clients’ offices or the offices of its collective members.

There is no room for fancy foyers full of awards, marble floors and screens. The virtual world of the pandemic has levelled the playing field so that it’s “just your backdrop against someone else’s backdrop”, Rossi says.

Life’s a pitch

But have the new start-ups found it tricky to invest in pitches against the might of established holding company shops?   

While the new-business market was, not surprisingly, active at the beginning of the year, with the exception of media, it has now tended to flatten out to pre-lockdown levels, meaning start-ups are competing in an oversupplied market, with established agencies who can “invest” in pitching, Jones warns.  

David Pemsel, founder and chief executive officer at ScienceMagic, which has quickly grown to employ 100 people in the UK and 20 in the US, thanks to its merger with The Communications Store, says it’s important to harness start-up energy.

“There's a competitiveness, to make sure that we don't feel like a scrappy new start-up, that actually we come across as authoritative, professional, committed, bold and ambitious with our ideas and output,” Pemsel, who worked at St Luke’s in its heyday two decades ago, says.

“In the end, the answer is the answer. We should behave as if we've got the same right to be at the table as anyone else.”

"It doesn't matter whether you're Saatchi & Saatchi or Motel, you're four people on a Zoom call"

And Smith, founder partner at Motel, believes clients are now even more likely to consider a start-up. “It doesn't matter whether you're Saatchi & Saatchi or Motel, you're four people on a Zoom call. It's all about the chemistry and your personality.”

Clients are no longer impressed by the “finery” and showmanship that pitches previously involved, according to Rossi, who has previously worked at major global holding company networks.

Although he might once have invested “more than £100,000 on a medium-sized pitch, there's a lot of clients who hate that choreographed kind of thing”, Rossi says. And if clients aren’t even visiting fancy offices, what’s the point? 

The Constellation Collective, is “growing very well by avoiding lottery pitches”, he adds, while others report similar experiences of formal pitch-avoidance, gaining new business through recommendation and informal calls.

NCA has had the most charmed start, as its experienced founders started up where they left off by snagging Halifax (below) from their old agency, Adam&Eve/DBB, as their new agency's launch client.

Let the work speak for itself

Kate Bosomworth, founding partner at Platform, which specialises in three-to-four-month brand strategy projects is currently working with brands such as 58-year-old WeightWatchers. She says: “We’re building a reputation in the brand investor community for being able to create brands and strategy brilliantly. We're not doing creative pitches at all, and we don't seek retainer clients. These are high-level intense strategic projects.”

Similarly, Friendly Giants’ co-founder and chief creative officer Leisfield reports that the agency is “having a great run” – and it’s not down to flashy pitches. It’s already working with Virgin, Not On The High Street, the government’s Tech Nation project and BBC Studios, and has achieved a further four (as yet unnamed) new-business wins over the past three months, through meetings and discussions.  

Of course, “’Who is hot?’ is a question that many existing agencies get asked by their own clients or friends within the marketing industry, so being talked about as a start-up is always going to give an advantage, as Jones explains.

Having work that clients recognise as consumers themselves, rather than just as marketers, is disproportionately helpful for start-ups. Jones cites Motel’s work for Klarna and Other’s for Bloom and Wild (below) as examples of work that is gaining traction among brand owners and giving them confidence that can lead them to recommend a new shop, so securing prominent clients is considered key. 

Motel, which is currently working with five clients, including Klarna, says its high-profile work for the shopping app brought approaches from not-previously-known clients, with whom they have since had conversations and chemistry meetings.   

Exploit previous contacts 

For every start-up, a key milestone comes when they are able to convince their first major client with whom they have had no previous relationship, and therefore trust, that they are able to handle a major account without falling over.

Most start-ups, tend to have an 18-month window when they can exploit their previous personal contacts and connections and get off the ground, Jones explains. “As a start-up, it is really important who you know as much as what you know. After [the 18-month] point, they cease to be a start-up and need to have established themselves.”

Chris Kemp, founder and chief executive of networking business Ingenuity, believes the purpose, reputation and unique selling point of a new agency is more important than ever in the post-pandemic quest for new business.

“Typically, start-up agencies rely a lot on their founder’s network and word-of-mouth to get off the ground,” he says. “This is still true, but in an ultra-competitive, post-coronavirus landscape, where budgets are tighter than ever, it will not be enough for success. It will be absolutely critical for these agencies to put in place a really robust and proactive sales and marketing plan in order to reach their true potential.”

A clear proposition is having the desired effect for Friendly Giants, where the priority has been to “find bigger stories that are more meaningful in terms of business returns”.

D’Amato says this has been pivotal in its work for Not On The High Street, where the shop was able to work with the online retailer to create a more thoughtful brand strategy, such as a focus on letterbox gifts during lockdown.

Being involved in the business behind the brand, and its strategy, rather than simply a creative execution tacked on at the end, is something that start-ups such as Friendly Giants are striving for, D’Amato explains. 

Having a clear idea of what it stands for, who to work for – and not work for – is clearly important. This could be through the agency’s tone of voice or personality, as in the case of Friendly Giants, Motel and Other, or output, as in the case of Platform and ScienceMagic. 

What clients want 

Increased client bravery – marketers seeking out agencies that can deliver fresh approaches – often means an increased inclination to consider a start-up. Meanwhile, difficult market conditions may also be compelling some marketers to rethink their approach, broadening rosters and considering different types of agencies.

“There are major clients in the marketplace at the moment, who are looking at agencies and are prepared to look at agencies of our size, as new as we are,” Smith says.

Justin Tindall, founding partner at Platform, believes smaller and medium-sized clients are ready to turn away from agencies that are set up to service massive global clients.

“One of the enduring problems is that agencies don't know how to change, and those with great, big clients can't change, because they have to structure their knowledge, skills and behaviours around the client,” he says.

Rossi agrees that clients want a different output. “And you can’t have a different output if the input has been the same for the past 100 years," he says. "Bar the haircuts and the clothes, nothing's changed in advertising since Mad Men times, but when you have a start-up, if you have the right angle and the right people, you can shake things up.”

There’s a widely held belief that clients appreciate the generic benefits of working with a start-up in terms of hunger, energy, access to senior talent, being disproportionately important and potentially being in at the start of a successful agency, Jones explains. And there are many who are also keen to move away from the old-fashioned agency model and tap into something nimbler. 

Other, which has doubled in size to 16 employees, says clients are keener to try new things. This is especially true for fast-growing brands such as Bloom and Wild, Kyle Harman-Turner, executive creative director, says. He cites theatrical escape experience work for Jaguar Land Rover’s on-demand car rental service, The Out (below), and the ban on sales of roses for Valentine’s Day for Bloom and Wild as a stand against “clichéd care”. The agency has also recently won work for a well-known tech brand, for which it plans to create similarly “other” work.  

Round-the-world, round-the-clock talent  

One pandemic-driven change – the sudden reality of work-from-anywhere – means start-ups can mine the world for talent. The flexible work ideal, much vaunted and toyed with pre-Covid, has become a reality. For Friendly Giants’ Leisfield, working with someone in Bristol had previously seemed tricky. Today, the creative shop employs someone in New Zealand. 

“Now it's so normal, and it's opened our talent pool globally. We can brief at night, and then wake up in the morning like the elves and the shoemaker; suddenly there's all this work there,” Leisfield says. 

In the same way, Platform has employees in Canada, for example, who pick up tasks as the UK-based business is finishing for the day. And it’s a similar story at ScienceMagic, where Pemsel acknowledges the benefits of accessing a wider pool of global talent. However, he warns of Zoom fatigue, burnout, and awareness of time zones. “If you have 16 people from 16 different territories on the same call, you need to be mindful that somewhere it’s 11pm. We need to be careful.”

Doing the work IRL

The trickiest part, these start-up leaders say, has been navigating a lack of face-to-face time. Other, for example, has met only three of its seven clients face to face, while Friendly Giants says it had met “very few”, but had been able to create “stronger bonds” with clients during the pandemic.

ScienceMagic discovered that some clients had been “very keen to meet”, while others were “perfectly happy” to remain virtual, for now. More resources are required to bring clients on board in a virtual world, with a greater demonstration of trust needed, Pemsel says. New clients and employees alike require more attention due to the pandemic. 

Although most start-up leaders, including Rossi, report feeling they know colleagues and clients very well after seeing into every room inside their homes, not working in-person was described by Rossi as the “biggest single blocker to the general fluidity of how we as people like to operate”. 

Born in 2020, but how long will they last?

To make a lasting impact on the client and adland landscape, agencies born in 2020 will not only require energy, talent and tenacity, they will also need to avoid two major pitfalls. 

First, commercial competence is a key, but often-neglected ingredient. Having someone with commercial and financial nous on the team is “essential” for any start-up. “Cashflow can be an absolute killer for any fledgling agency, so make sure that you have someone who knows one end of a balance sheet from another,” Jones says. 

Secondly, they should avoid enthusiastic hubris. Start-ups often fall into the trap of trying to compete with the big agency that they left, rather than realising the real competition is other independent agencies and start-ups, Jones explains. 

As the fog of the pandemic begins to clear, the ad market is recovering strongly. In the short term, at least, it’s a good time to be scaling a business with few overheads. In the longer term, only the best will survive and thrive.

Main images (clockwise from bottom left): David Pemsel and Julietta Dexter (ScienceMagic); Lee Tan (l) and Rob Smith (Motel); Justin Tindall and Kate Bosomworth (Platform); (left to right) Kyle Harman-Turner, Paulo Salomao, Metz Bryan-Fasano, Sarah Oberman (Other). Far right: Klarna "Mythbuster" by Motel