Small is the new big. Sorry for the cliché, but it’s not only the Tata Nano that is making a virtue of size. Media owner Time Warner Inc. may sell off some properties and spin off big assets such as Time Warner Cable Inc. in an effort to increase investors’ wealth.
In contrast, advertising networks are getting bulkier by the day, on the back of mergers and acquisitions by their hungry holding companies. The race to be biggest is speeding up, and revenue tallies for the first nine months of 2007 show that the WPP Group Plc. is just a few steps behind the Omnicom Group.
It’s a tough call. Agencies need to have scale to be profitable, win and service global accounts, and acquire specialist media resources. Global consolidation could, however, cramp risk-taking creativity that helps brands stand out in today’s market clutter. Being smaller usually ensures faster turnaround of ideas, edgier creatives, and sometimes more services to clients for less money. Little wonder that Unilever N.V. recently awarded one of its largest global campaigns of the year, the Superbowl ad for Sunsilk, to a strategic planning boutique instead of its global ad agencies.
Ad networks are themselves aware that sprawling, rigid structures and silos could be detrimental to creating true integrated marketing campaigns. They are hence striving to keep the values of small, while getting bigger. Many networks are creating “open architecture” models, which encourage creative people and various media specialists to work together again under one roof—though in fluid, project-based fashion.
Many agencies have multidisciplinary teams that cluster around a brand, instead of discrete departments. To manage business conflicts, gigantic media buying specialists such as GroupM have multiple sub-brand agencies. And holding companies themselves are buying smaller agencies, or starting/funding them—Omnicom Group now has BBDO India.
Canadian businessman Miles Nadal is, however, the true anti-network king. He’s chairman of 10th largest holding company, MDC Partners Inc. of Toronto, which is founded on a “perpetual partnership” business model. While other ad agencies are owned by holding companies and their creative persons don’t own equity, MDC picks up 51-60% stake in agencies, design shops, etc., which have hot talent, and about 10% of their employees also own equity. This fosters an entrepreneurial spirit from partners and boosts creativity, especially since all business support comes from MDC. Nadal’s view: The world doesn’t need another global advertising agency network. It needs good ideas.
Marion Arathoon is Mint’s advertising editor.
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