Thousands of small agencies are flying under the industry radar as big brands enjoy ‘affairs’ worth tens of millions of dollars with small operators while proclaiming monogamy with their lead communications agencies.
Research by marketing and advertising consultants Trinity P3 has revealed that more than 3,000 companies are forging casual relationships with major brands well away from the glare of the industry spotlight.
The Valentine’s Day revelation shows that the space of specialism has become one of the biggest growth areas in advertising, with some small agencies earning millions from their big brand dalliances.
Darren Woolley CEO at Trinity P3 said there are agencies that never appear on pitch lists.
“They are ones you never hear about,” Woolley told Mumbrella.
“They do not enter industry awards. They do not chase publicity in any way. They grow through word-of-mouth reputation, referrals and project work.”
Woolley: it’s happening everywhere
He said the clear ability for these agencies to earn big money from brands suggested that 2016 was going to be the “year of the affair” as brands quietly cheat on their lead agencies.
“More and more marketers supplement their main agency roster with more and more affairs on the side with smaller specialist agencies,” he said.
“When we talk to marketers about their roster, most will only count the big agencies, they rarely consider the smaller specialists they are working with,” he said.
“Typically, we are told they have two or three agencies when, with a little digging, we find 10, 20 or more – and in one case a company had more than 200 paid in the past year, according to their financials. It’s much like someone saying I have one spouse and failing to mention the various affairs they are having.”
In one case a design agency appointed on a project had quietly grown its casual relationship with a major brand to the point where it was now worth $2 million annually to the business. Woolley said this example is not isolated.
He said many relationships with small agencies of up to 15 or 20 staff began with a single project but then grew into full-blown affairs, often with no contracts or other protections in place.
“It is what they become,” Woolley said.
“Usually it’s a bit of dalliance and might only be a $50,000 project and it’s very contained, but then they do a good job on that and so suddenly they get another project, and another one, and in the case of the design studio they ended up with a $2 million business with no contract and they had never had to tender for it.
“In procurement terms, it is called ‘leakage’ and it is worth tens of millions of dollars,” he said.
P3’s research found 576 agencies working with major brands on app development, 538 in video production, 427 in event management, 385 in qualitative research, and 365 in data analytics and insights.
Woolley said the plethora of casual affairs in adland had already led to the development of a Tinder-like swiping app in Europe, where brands liked and dismissed potential partners, but in Australia P3 had developed its own Perfect Match system were specialist agencies could be reviewed “safely”.
“We want to make sure they play safe by ensuring they don’t just hook up with the first agency that catches their attention, and that when they do engage it is using the protection of sound remuneration or fees and a fair agreement,” said Woolley.