getting there

Time to "rightsize" your agency?By Brian Davies, Managing Partner, Movéo Integrated Branding

In business, it sometimes makes sense to buy from a large company. Think manufacturing, where economies of scale come it to play. As production increases, the cost of producing each additional unit falls, which can result in savings for the customer (if passed on, of course).

But when considering the use of marketing and communications resources, economies of scale rarely apply. What about the media-buying power of the big shops? Truth is, this “power” is vastly exaggerated (mostly by the big shops). Today the idea of media clout, whether it’s in negotiating paid media space (advertising) or getting stories placed (PR), is largely mythical. The media will cut deals with any agency of any size –- as long as the client spend is behind it.

In point of fact, the larger a marketing and communication firm becomes, the greater the likelihood for many diseconomies of scale to occur that may actually increase costs for clients. These diseconomies arise from the usual culprits of “supersizing” –- inefficiency and over-hiring –- but also from a host of less obvious reasons. That’s why in today’s tough economic times, it may pay to look at a smaller marketing and communications partner. Here’s why:

Productivity

Smaller firms tend to make a client’s money go further. First, they cost less. Here’s a real world example –- we recently worked alongside a large agency collaborating on a client project. This agency's monthly fee equaled our annual fee. This doesn’t mean smaller firms are cheaper; it means they are leaner and more efficient in the way they operate. Instead of the client paying for 20 people to sit in a room, the client pays for five (usually the number really needed to get things job done). Naturally, large firms also have more overhead, usually in the form of “plush digs” and unnecessary layers of middle management. Smaller firms aren’t bloated and can’t afford to be. As a result, they provide exactly the same services as large firms for less compensation. Second, smaller firms tend to foster an ability to “make things happen” for less money. Early on, they develop a philosophy of not letting execution overshadow content. Ideas have to work uncamouflaged by excessive production values that are, frankly, usually just indiscriminate waste that takes place on the client’s dime.

Quality

Quality control is so much harder for big agencies. Of course there are great people who work at big agencies, but there are also some that are not so great. In a smaller firm there is less room for “passengers” –- if you’re not doing the job at a small agency, there’s really no place to hide. Also, smaller firms are “apolitical” –- client work does not become a casualty of turf battles. In fact, the siloed nature of a large agency can actually prevent integrated communications from becoming integrated. At a smaller firm, people enjoy working in a freer, more close-knit environment. Media people can look over their shoulder and see what creative people are doing, and visa versa. A firm of <100 people allows for a team dynamic which becomes hopelessly lost once you reach a certain number in the company. There is also a tangible sense of belonging and team building that goes on at a smaller firm. Once teams grow larger, it becomes harder and harder to retain this dynamic, and it’s the work that ultimately suffers.

Agility

The old adage, “Speed, quality, price: choose any two,” does not apply at smaller firms. This mostly has to do with the nimbleness that a small size allows –- the speed boat can run rings around the hulking, ponderous cruise ship. Agility tends to start at the top. At smaller firms, you typically have the closer, day-to-day involvement of agency principals. As a result, there is less “checking” and more “doing.” This is especially important in today’s economy where it’s no longer what you do that counts, it’s how quickly you can take advantage of new opportunities and challenges that’s really important.

Leverage

Smaller firms need every client. Big agencies don’t. If a smaller firm loses a $5 million piece of business, that’s seriously bad news. If a big agency loses the same, all that means is eight more pink slips. (In fact, turnover at large firms is another problem all its own.) Clients simply have greater leverage in a relationship with a smaller firm than a large one. It’s always amazing to hear that a $1 to $5-million client signed on with a $500-million agency. What kind of service will they get? The larger agencies are good at getting stellar creatives under their wing, but would a client that size be getting a genius or an apprentice on the account? Let’s face it, if a client represents a small percentage of an agency’s billings then it’s going to get a small percentage of its salary pool, no matter what was promised in the pitch.

Talent

Talent has no size. In fact, talented people are often more attracted to smaller firms because that’s where they have a greater opportunity to explore areas that interest them, innovate or pursue responsibilities that align with their own professional goals.

What about creative types? Even at large agencies, the creative process really comes down to small group of people throwing ideas at each other. Can large agencies ever own that?

“Think small” is the clever headline on the now famous ad DDB created for Volkswagen in the early 1960’s. Today DDB is a mega agency, but they no longer handle Volkswagen -- comparatively tiny Crispin Porter & Bogusky won the business in 2005. The bottom line is, today, clients are looking for value anywhere they can find it. If a smaller firm has the “3 Cs” –- capabilities, creative and chemistry –- advertisers will be doing themselves a disservice by going large just to get “a name.” Plus, remember that people at smaller firms have to give twice the effort. If they don’t, they may end up, well, you know where.

If you'd like to learn more about Movéo Integrated Branding, please call 630.570.4800 or contact us here.

©2009 Movéo Integrated Branding