A growing number of corporate giants are handing big duties to small agencies.

By Ann Cooper

The burgeoning ranks of megaclients depositing their brands, projects or even entire accounts at small ad agencies have been well documented of late. For example, South Korean car company Kia ($250 million) is lodged at Los Angeles-based davidandgoliath, the $60 million amp'd mobile phone company parked at TAXI's recently opened New York office, Strawberry Frog, which handles Heineken globally, also got some Old Navy business when that client decided to go for a portfolio approach, and the five-year-old Boston-based Modernista! has worked on The Gap as well as Hummer.

Seattle-based Wexley School for Girls does project work for Nike and ESPN, Mother, New York, has a chunk of Miller Beer's business, while New York's Amalgamated won the $50 million Cablevision Optimum account. British Airways, rather famously recently left M&C Saatchi and went to Bartle Bogle Hegarty, and MINI just opted to go with Butler, Shine, Stern and Partners. Giants Coke, McDonald's and Procter & Gamble have also all hired smaller shops to handle brands or projects. In fact, it's becoming harder to find a client that doesn't seek alternative ad shops than one that does. And the trend is transforming the advertising landscape.

Small agencies, not surprisingly, claim that they offer options and services not available to clients at big agencies: most obviously, nimbleness, speed and creativity. According to Kevin McKeon, partner and executive creative director at Strawberry Frog, "The old metaphor of big agencies turning round a battle ship is still true. We have very little internal structure, which makes the whole process very fast. We don't have to go through four levels of creative management."

Then there's the ability to experiment without too many consequences. "We're not looking for the whole of Ford, we want to handle the launch of Jaguar," says Guy Barnett, co-founder with Callum MacGregor, of New York's The Brooklyn Brothers, which relies heavily on project work and handles Xenadrine and some duties for "This means that Ford can still keep its mega-agency, but we can experiment with individual brands, a process less likely to influence the bottom line than if it made a wholesale shift. What we produced last year in terms or work would have been impossible in a large agency."

What small agencies do differently, argues Doug Cameron, director of strategy at Amalgamated, is treat each client as if the agency's reputation depends on it. "Small agencies live or die on the work that they do in their first few years: Every radio ad, web initiative, or piece of collateral can either make the agency famous, or earn it a reputation as a bunch of hacks," he says. He argues that big agency behemoths are different beasts, and tend to focus on short-term profitability that outshines longer-term, reputation-building considerations.

Small agencies also claim that they don't try to sell clients unnecessary services. "Our account managers are not compensated by what services they up sell to our clients," says Lance Jenson, co-founder and executive creative director of Modernista! "Everyone here has experienced and had to enforce the goals of holding companies when we worked at larger agencies. Here, it depends what the real needs of clients are."

Others argue that small agencies are more honest in their dealings with clients. Marc Gallucci, CEO/creative director at Fort Franklin in Boston, which handles projects for ESPN, Dunkin Donuts and Timberland among others, says, "Throughout the years of working at other agencies, what I thought was destructive to the work was spoon feeding clients. They drink directly from the hose here at the Fort. Some like it and some don't."

Ben Purcell, associate creative director of davidandgoliath, points out that irrespective of the size of the account, the agency still functions like a small agency with a very personal feel. "Clients have more access to David and the rest of senior management. It is less of an us versus them mentality,'" he says.

On the other hand, it may be harder for a small company to get recognized, not just because of the competition from other small agencies, but also because of the fragmented media landscape. "In the old days, you did a famous campaign, and the whole country knew about it," says Barnett. "One Super Bowl ad could put you on the map. Today, less people see even a successful campaign. It took Crispin Porter over ten years to become Crispin Porter. Ten years before that, it took BBH even longer."

Some attribute their success to giving clients more one-on-one attention. "I believe this is the main reason smaller agencies want to stay small," says Gallucci. "We dive deep, and in a sense become an extension of our clients. As a result, we create work that absolutely blows them away. This is why big clients such as ESPN hire us."

Today, there are as many different types of agencies as there are different types of creative names for them, with many still evolving and growing. According to Gallucci, "We hire multi-disciplined creative thinkers who think more along the lines of inventors and scientists. Having your success tied directly to the success of the company is a driving force. There is a willingness to share and build ideas more openly when your success as an individual depends on how much you contribute to the group." And by hiring such multi-disciplined thinkers, says Gallucci, it also means that one person manages multiple roles. "It still makes me laugh when people ask how I learned to run a business if I went to art school," he says.

Jenson at Modernista! deals with growth by attracting what he calls "winners." "Winners win, or want to win," he says. "Growth can be problematic for those without deep pockets, but we offer our people a say in the running of the agency and a true sense of empowerment not found at larger shops."

Structurally, Amalgamated started out as an account guy, a strategist, and a designer, working together in the same room, which, says Cameron, worked much better than the bureaucracies at most agencies. As the agency grew, Cameron decided to replicate the grouping, rather than split into factions. "Clients came to us because of the nimbleness and entrepreneurialism of the original group, so we changed this as little as possible," he says. "Now, we've got several small project teams. True, we've added disciplines such as media planning, promotions and channel planning, but the lean, collaborative, structure is the same."

But there are disadvantages to being small. "We were a two-man creative operation," says Barnett of The Brooklyn Brothers. "Then we realized it was time to grow up and offer a more rounded service to clients." So he hired two new partners more used to working on big brands, Paul Parton, former director of brand planning at DDB and Matt Lake, also an ex-DDB employee. He and MacGregor also were both at Ogilvy and J. Walter Thompson.

Purcell of davidandgoliath points out: "We don't have every resource under one roof. But from day one we've always used that to our advantage. We hire the best of breed specialists that are right for the job, so we're able to work with the best and still act as brand stewards for our clients."

But Cameron of Amalgamated has a salutary tale: "We just lost the JetBlue pitch to J. Walter Thompson, which was rumored to have won, at least in part, on the basis of their large network and elaborate resources. I'm not sure which side of the 'small agency/large agency' argument that this supports. On the one hand, we lost. On the other, we're a 27-person agency that gave a multi-billion dollar conglomerate a run for its money."

As for effectiveness, are small agencies producing the results? According to Cameron, in the first year of music channel Fuse's re-launch, ratings doubled. "Our work for Fat Tire Amber Ale increased sales by as much as 48 percent in some markets. I'm sure other next wave' agencies are getting similar results. People forget that when advertising is well planned, managed and executed, it actually works."

Burnett points out: "We're judged by the effectiveness of our advertising and don't expect a client to come back if they're not satisfied. Three of us have direct marketing backgrounds so results 'immediate, bottom-line results' is in our DNA."

For one client, Premcal, a PMS product, the Brooklyn Brothers gave up its usual fees in return for a stake in the company. "Our success is literally tied to the value of the client," he says. "Doing funny or smart creative work is all well, but having a measurable effect on a consumer is much more rewarding."

But irrespective of whether this is just a fad or if there's been a truly seismic shift in advertising, the future for small agencies looks promising. "Since the 1990s, entrepreneurialism, radicalism, and creativity have increasingly become corporate ideals," says Cameron. "In the past, companies aspired to be efficiency experts like GE, AT&T, or Chrysler. Now they want to be radicals like Ben & Jerry's, Google, or Virgin. You might call this the Steve Jobs-ification of corporate America."

And as this worldview takes hold, many large clients, like Procter & Gamble, are increasingly looking for revolutionary ideas, and ways to shake up the system. "Small agencies are going to be a lot more convincing about their entrepreneurialism and radicalism than a holding company-owned multinational with the initials of its dead founder over its doors," says Cameron.

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