Life after the GFC: Finding opportunity in a growth-challenged agency economy
After John Ford's The One Centre went into administration back in 2009, many proclaimed its demise as a precautionary tale for agencies trying to keep afloat post-GFC. Now, nearly nine years later, Ford considers what the wider industry can learn from his experience.
The One Centre was a high-growth business before the GFC hit – hard – in 2008. We had grown revenue to $12.5 million annually and built a blue chip client base with brands like Woolworths, American Express, Jetstar, The Red Cross and Freedom.
The agency’s overseas work was booming, branding the Asian Games in Qatar, creating global platforms for Audi, rebranding Tiger Beer in 50 markets, and working with the world’s biggest developer, Nakheel, branding Palm Mall and other mega-developments in Dubai. We were twice named in BRW’s Fast 100 list of fast-growing companies, and were recognised as a Young Export Champion by the Federal Government’s Minister for Trade and Austrade.
Then the GFC struck, and overnight, Nakheel, our biggest debtor stopped paying, and a number of clients locally and internationally were ordered from on high to stop all discretionary spending. The combo of a big bad debt offshore and sharp slowdown crippled cashflow and sent The One Centre into administration in 2009.
A year later, I reopened The One Centre after deciding not to let a one-off global crisis determine its fate. It was an opportunity to completely rethink our model and rebuild our services from scratch to meet new and emerging client needs.
The One Centre’s offices
I wrote down the general business lessons I’d learned from the GFC experience. Most were about risk management.
I decided that as a project-based agency, we would keep our overheads low by having a flexible resource base. Being multidisciplinary was one of our key success factors, but instead of having every resource in-house, I built a network of specialists to support a core cross-disciplinary team.
I also realized it takes a village to raise a business. You can’t do it alone. So I surrounded myself with a network of good counsel, connections and capital, and designed our future model for partners, not just staff.
I vowed never to expand internationally without deep pockets and well-connected local partners, especially in places where the business culture is different.
Most of all, I learned the global economy and geopolitical environment is unpredictable. It can change fast, so be ready. You can’t bet on it all being tail winds. You need to have a vision but remain agile and willing to pivot.
The big question: where to now for creative agencies?
Managing risk in business is one thing, but managing relevance is the overriding concern for most creative agency leaders. Creative services as we know it are under attack from various technological and territorial forces and we need to fight smart.
Some of the big questions I’ve grappled with include:
How do we deal with global management consultancies driving down into creative services, adding more competition to an already saturated market?
Where will we achieve growth this time around in a world where clients are taking enormous quantities of production in-house, or importing it?
How do we counter the media industry vacuuming up marketing budgets and commoditising creativity in the endless pursuit for reach in the black hole of digital media space?
And how do we benefit from the innovation and start-up economy when the pervading culture in many new and disruptive ventures is to bootstrap brand?
There are reams of data driving our industry, but it’s ideas that disrupt and emotion that connects. So here are the big four opportunities I’m seeing as the founder of a growth-seeking creative agency in this new agency economy.
1. Creative management consulting
One area where I see great opportunity is the advent of global management consulting firms driving ‘down’ into marketing services in order to own a bigger share of their clients’ transformation and innovation spend.
This will force agencies to get smarter and drive ‘up’ to compete. It also provides greater dimension and polarity to the industry, which makes positioning easier, in a way.
There is plenty of space to not just compete with the big consulting firms, but to use the space they are creating to offer a like service for smaller and mid-size companies, and for big corporates who want a more agile partner.
2. Customer experience champions
The pervading start-up culture in Australia seems to be more about being first to market than best to market. Yet many smart private equity, venture capital and innovation focused big enterprises recognise that success in market is a marriage of great idea and great brand and customer experience. They’re not inseparable. The power of an idea is its experience.
For creative agencies, we need to lead the charge on this philosophical war or end up not benefiting from the innovation economy.
We need to advocate clients investing equally in offer and experience, because disruptive new ideas need compelling new realities to change beliefs and behaviors.
3. Cross-disciplinary creativity and flexible production
Creative agency models once relied on doing thinking and ideas cheap and making money out of creative production.
While I think we’ve all got a lot better at pricing our IP, we’re now faced with new production and execution competition – our clients.
Many clients are building sophisticated in-house digital, design and content capabilities. And many have micro supplier networks locally and globally that can do things faster, cheaper and with greater control (less hassle!).
Rather than battle this trend, I’m betting on owning creative origination and orchestration and being flexible and agile in production. We’re focusing on where clients see real value, which is in big ideas, cross-discipline conceptual expression and orchestrating quality delivery, in partnership with them and their supplier systems.
4. Connections planning
Another big opportunity I see is to bring back a ‘media agnostic’ connections and media business as a core pillar of a creative agency offer, as we are at The One Centre. I’m talking about a Bellemy Hayden or Naked type offer, but totally integrated as the third dimension to our process, so we can consult, create and connect in one.
To create disruptive ideas that aren’t part of the data set, we need to rethink our approach to media, which has become far too big data focused and not big thinking focused enough. There seems to be an obsession with reach versus looking at the relevance and role of media in the customer journey and the importance of context to express and connect a brand idea to its audience.
Clients’ budgets are so stretched trying to fill vast real estates of media, especially in the digital realm, chasing increments with low rent creative material. Creative is almost becoming incidental, as if presence is more important than relevance, originality and impact.
There are big and small operators in the media space riding this wave and vacuuming hard, advocating ‘data sciences’ and automation over differentiation because it’s a lower cost, lower effort way for them to serve and suck.
The trouble is, ultimately, everyone is using the same tools, and like the trend in commoditised creative production going client side, AI is going to take over media planning and optimization.
What we are betting on is objectivity, insight and original thinking in this space. We need to help our clients think both analytically and laterally so they are not just battling it out in the vacuum, but owning spaces inside it and out, which relate to both positioning and path to purchase in a uniquely relevant way.
A new approach for a new era
As painful as the GFC was, it taught us some valuable business risk management lessons. It also provided a one-off opportunity to completely review our services for a rapidly changing world.
Together with my backer Brook Adcock, CFO Richard Cansick and GM Katie Molloy, who joined The One Centre in 2013 – we have rebuilt the agency into an ideas and innovation company for brands.
Our goal is to double in size over the next five years, although I’ve learned that size doesn’t matter so much as significance and stability. We don’t want to sit at the more commoditised production end of the market. Instead, we’re pursuing new, higher-end opportunities with the energy of a start-up and the wisdom of an agency that first opened its doors 18 years ago.
John Ford is founder and CEO of The One Centre.
Kenny would be proud.
User ID not verified.
Nice piece, John – good analysis and well argued case for insight and original thinking in an increasingly commoditised space.
User ID not verified.
Thanks for sharing your thoughts on this constantly changing industry. With all the martech out there, great ideas, emotions, and incredible experiences are still the key elements that stop an audience in its track. Thanks for sharing John!
User ID not verified.
John,
As insightful as ever from a man who has experienced more than most.
Congrats Damian
User ID not verified.
Wise as ever John.