Novel agency models based on cheaper pricing and other value propositions are springing up everywhere as economies go into a tailspin.
Some UK-based agencies are talking about pricing models that deliver cutting-edge creative ad strategy while eliminating production markups and administration luggage associated with multinational ad networks. London Advertising, for one, is reportedly offering great creative work to clients without production markups; its rate card clearly shows production costs and savings clients can get. Some big clients are buying into this since markups usually account for a huge chunk of agency profits.
The advertising world has sprawling multinational networks on one end and boutique or independent agencies on the other. In between are various species of global ad networks hosting novel and cost-effective business models. These are usually a loose collaboration of independent agencies that do not give up an equity stake to become network members. They promise clients competitive pricing without the baggage of multinational networks.
Many of the agencies these unique networks have here say they are doing well in tough times and have ambitious plans for this market. Each network, however, underlines that its model is different and better.
Thenetworkone Management Ltd’s founder and president Julian Boulding says it custom-builds networks for international marketing clients, using agencies across 65 countries according to each client’s individual needs. Global account directors, usually based in the client’s home market, coordinate the agencies’ activities. Agencies are contracted when needed, though relationships are built in advance. So clients pay only for resources they actually use.
Agencies they’ve met and admired here include Madison Group, Mudra Communications Pvt. Ltd and CreativeLand Asia Pvt. Ltd, among others. Independent agencies are cost-effective and innovative, and they react quickly to opportunities, a crucial advantage today, he says.
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Boulding says there are various independent networks globally, such as Worldwide Partners Inc., or WPI, International Communications Agency Network Inc., or Icom, Magnet Global Network and Taanm, which have business models different from Thenetworkone and exclusive arrangements with an agency in each country. He doesn’t view these as competition but, in fact, cooperates with them and refers business to their individual agencies when there’s a right offer for a client’s needs, he says, adding, “They offer homogeneity, but not flexibility.” WPI is based on a so-called open-source collaborative model in which agency shareholder partners are invited to pick up a stake in the company instead of the other way around. Lisa Kettman-Kervinen, director of Europe, Mid East, Africa collaborations at WPI, says it has 96 agencies in 56 countries and each agency has an equal shareholding in the network.
In India, Pressman Advertising Ltd has a 1% stake in WPI. Local agencies are supported by a small staff from headquarters. “They (local agencies) can select any resource in the network that matches their needs: geographically, in a specific discipline or in a specific category. They don’t need to buy into an entire network,” says Kettman-Kervinen.
The Independent Network of Advertising Agencies, or IN, calls itself a local-global network which has integrated marketing communication agencies as members who join forces to apply local knowledge to international assignments.
Its India members include Vyas Giannetti Creative Pvt. Ltd, whose chairperson and chief creative officer Preeti Vyas says that while being a member worked well for it in terms of business, it will be leaving the network since it is getting deeper into the extremely specialized design arena. She has been creating her own collaborative global network of design and communication agencies and members wouldn’t have to part with equity.
These unique networks are, however, not so enamoured of models such as London Advertising’s. Al Moffatt, president and chief executive of WPI, says some of these models indicate desperation and not any true business model. “When you turn to a giveaway business model, you take a short-term hit versus thinking about long-term sustainability,” he says. It all sounds great, but the reality is that agency profitability will suffer. It’s not about gross revenue but about how much you profit, adds Moffatt.
Boulding’s opinion is mixed. London Advertising is a different model and right for some clients. It offers a central strategic and creative capability and outsources local adaptations to Splash (a production agency) and to TextAppeal Ltd (a translation agency), he says. Sometimes, it’s cost-effective to use centralized adaptation for international campaigns. “If clients don’t need local agencies, they should not use them. In this case, traditional networks are a waste of money,” says Boulding.
At other times, however, clients need local presence, for example, to organize events and promotions, and this approach would then not work for them, he adds.
Marion Arathoon is Mint’s advertising editor. Your comments are welcome at email@example.com.