October 15, 2019 Dave Reed

Are the big six ad agencies heading for extinction?

We were really pleased when an article by one of our founders, Dave Reed, sparked lots of reaction when it was published on The Drum. In case you missed it, here’s some of the highlights…

The backdrop

“Latest figures from the Office of National Statistics (ONS) reveal that we’re teetering on the precipice of a recession, with Brexit and the ongoing China-US trade war taking their toll on the UK economy. Yet despite this it was the creative sector, in the guise of TV and film production, which provided a much-needed boost in the three months to August. Ad agencies on the other hand are reporting falling and faltering results.”

The problem for big agencies

“Where TV and film has adapted to a changed world, with traditional terrestrial channels being overtaken by the digital goliaths of Netflix, NOW TV and Amazon Prime, the traditional agency business model of large, slow-moving holding companies has remained largely the same… Big brands are increasingly waking up to the fact that they don’t need an agency that can match their size but one that can match and exceed their ambitions. Where once there was a belief in the stability of some of the big beasts, clients now find that there is so much transition within behemoth organisations who struggle to retain staff that they often find they have a new account team every six to 12 months.”

The solution

“For smaller independents [like G&T] there isn’t the need to cover huge overheads or maintain strong returns for investors. Often clients are shocked by our willingness to provide the simplest and easiest solution rather than the most expensive. Whereas a media buyer will inevitably revert back to type, suggesting a high-cost traditional media campaign and a social agency will always opt for a social activation, independent creative shops like us are able to benefit from and access a broad range of skills and experience which means that we don’t deliver the same old predictable answer to clients.”

“Agility is only possible due to the fact that for independents like us, directors and owners can remain close to the action and can adapt all facets of a client’s account to their needs… We really can act as a partner to our clients in a way that isn’t possible with larger agencies, who are reliant on ass-covering techniques like timesheets, contact reports and those other unnecessary, time-intensive administrative processes that are needed when the agency leadership is so many steps removed from delivery.”‘