Some years ago there was an emerging trend among London advertising agencies to launch their own consumer products. From what I have seen it didn’t amount to much, but some high profile agencies were promoting the idea that in order to authenticate their proposition agencies should start practicing what they preach by setting up business initiatives of their own. There were a couple of product or brand launches as a result, but I’ve not seen much of this kind of thing since.
Last week I saw a report in The Drum of Tim Williams from Ignition Consulting expressing the belief that, in the light of the decline in traditional agency business, agencies should give this kind of initiative serious consideration and he was able to cite a few successful projects of this type to underline his point. Not only do such projects provide agencies with a revenue stream to offset the fall in income they are experiencing these days, but as Tim says it gives an agency greater credibility with clients whose needs have changed a whole lot since the traditional agency mould was set. Sharing clients’ experiences with production, distribution and the like certainly won’t hurt any client/agency relationship. These days clients are looking for agencies that they feel can offer them serious business advice, not just the arty-farty stuff that was their forte in the past. This has all kinds of implications for agencies, not the least of which regards the age and gravitas of account handlers and strategists (how much weight does the recommendation of a college-leaver carry when you are making a major investment decision?) as well as the structure, skills and processes contained within the agency offer.
Maybe the agency of the future looks something like a business I encountered recently in Dubai? There a woman called Asil Attar is investing in promising fashion jewellery and furniture designers, providing an incubator with mentoring and support from her team of marketers. As I understand it she’s devised a programme where her wards are able to gradually buy themselves out, but meanwhile they become part of a promotions machine that includes features like pop-up stores and I believe, shortly a fashion store in one of the big Dubai malls. Isn’t this an approach that a few traditional agencies should be looking to adopt right now?
Adam Healey, a friend of mine in the US is involved with an incubator that provides a roof over the heads of start-ups but additionally a club-type venue for students with ideas. Here they can hang out and hope the magic of the start-ups rubs off and they can attend talks from experts and successful entrepreneurs. So far, at least HackCville, as it is called, doesn’t invest in its members but philosophically, at least, that’s a small step to take.
I really like the idea of agencies as incubators of new businesses. It gives them a chance to put their money where their mouths are and I can envisage such agencies evolving into stables of talent with varying degrees of cudos. Like a grown-up university start-ups could enhance their value by association with particularly successful stables. Its an all-round win-win.
The agencies would have to have deep pockets and be prepared to invest in fledgling businesses or maybe tie up with an investment bank or consultancy for third-party investment, but I can see it working. Is this the solution for traditional advertising agencies? Well, there are definitely some who might be able to pull it off. You might even see this as sorting the men from the boys, given that any agency worthy of the name should already have the business nous a start-up needs. I’ve already worked this in reverse a few times by working with investment consultancies to develop strategies for businesses they were thinking of taking on and in the past few weeks I’ve raised the subject with senior figures I know at investment consultancies, banks and agencies. It seems there are a number of ways this could work and nobody has said “no way!”.
May 29, 2014