Big brands enjoy million dollar deals with small agencies as adland abandons monogamy
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.”
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.
Simon Canning
Yep. That’s why a lot of freelance creatives, including content writers, such as myself, focus on building relationships with the not-so-big agencies – as it’s amazing what work/brands there is to be found.
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We ain’t sayin nothin.
In all seriousness, the fragmentation of the industry means that clients will pursue specialists and gone are the days of smoke and mirrors.
It’s a great time to be nimble (and global)
Oh you’re just realising this?
Too slow. Again. (yawn)
#21stCentury #bigissmall
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Spot on. It’s certainly happening in Brisbane. The big guys are losing their grip.
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More than happy to keep away from industry awards, avoid publicity and continue to grow through word-of-mouth reputation, referrals and project work.
Away from the insanity of procurement and the duplicitous roster consultants, good work’s getting done, clients are delighted and we’re running a commercially viable shop.
Long may it continue.
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“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.
Yes, heaven forbid that a client actually goes shopping without you holding their hand (and, of course, taking your cut).
I think you’re missing the point – the reason clients are doing this is that they’re sick of all the middle-men and associated baggage.
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But why would a small specialist agency want to be on the radar of a procurement group?
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The best way to get business is through relationship, avoiding the pitch all together The next best is by referral for doing great work. And the key is ‘specialists’. Big agencies cannot ‘specialise’ in everything. Many in the digital field say they do, but (especially technically) they fail. They either need to seek partnerships with us smaller agencies to protect their own credibility with their customers, or buy us out.
Long live the nimble small specialist agency.
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Understandably this is happening, the big guys don’t know how to identify, recruit or keep talent. Talent will find its own way.
Gone are the days of the drug fueled antics of the likes of mojo etc now they are just empty talentless shells with no loyal clients.
The way forward is freelance and to be very specialised… It’s like surgery
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I have resisted commenting on this but…
I find it ironic that trinity P3 would make this comment, aren’t they just a small, specialist version of the larger accounting and management consultancies.
Should PWC, E and Y be doing a sense check on all of the pitch doctors out there based on this rationale.
As we continue to have a more specialised work force there is going to be a need for more specialised services.
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“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.
Good call because there are lots of smaller agencies that will bend the rules to make money. they can lie to clients about how much the media really costs them to buy for example or they will outsource the work without telling the client and so on.
Buyer beware and always audit.
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Wait, let me get this straight, we need to save save poor clients who are being hurt by small agencies who are doing such evil they turn a $50k gig into a $2 million affair, which they’ve managed to so all without going to an through incredibly expensive, unrealistic pitch process?
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The “Agency of Record” model is both finished, and a procurement delusion.
No single agency can provide the diversity of talents that agile brands require.
They say they can, but they are lying.
The independent market – both small agencies and freelancers – is booming, because everyone does each job as though it’s their last job. Clients are loving it. Clients are cherry-picking, because they can.
The bigger, older agencies are the most vulnerable. The ones who’ve been around many decades, whose hipster websites and awards fixations try to mask the complacency and sense of entitlement they cling to, and who portray longevity as a virtue. Tell that to someone in a nursing home.
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Poor wee big agencies. Sign of the times. Having to be nimble, understanding content AND even “digital” is still a struggle for the big boys who still just chase the big TV money. They’re struggling to understand that they need good operation people to overhaul how things are done internally. By removing TVP departments which are big cash cows and to also provide content at a cost that the little fellas are charging big clients.
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T p3 never had time for the expert micro business operators that have nowmade them superfluous.
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Dave & But Why nailed it. Neither clients or the smaller agencies / freelancers involved want the likes of P3 butting their noses in!
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Creative research angle. Self serving article. Why the faintly ominous theme of ‘an affair’? What’s the actual threat? If smaller agencies are successfully fighting to get more incremental pie, then aren’t clients smart enough to assess whether they’re worth the money?
And that ‘hooking up with the first agency’ line just patronises clients, and belittles small shops punching above their weight. Basically it’s positioning P3 as the answer to a problem no one’s having. The volcano will be angry if we don’t go back and plant our crops.
Yep, the system is changing. The old guard will lose out a bit. As will some of their mates at the teat. I think this “Perfect Match” system might be keeping P3 “safer” than any clients.
Still, interesting piece.
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Someone’s disrupting the advertising industry? Surely not. This has been going on for years. Why do big agencies feel that they deserve all the pie? Since the slowdown in 2009 many big brands have realised that actually they can get more value, better ideas and have closer relationships with smaller players than having their budgets burned by unnecessary layers of command with the big cheeses. Bring it on I say.
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Heaven forbid a small agency snaring work from the big boys because they’ve been doing a better job!
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Smaller marketing agencies have a lot to offer, and it looks like people are taking notice!
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