Last week I had the honor and pleasure of attending the Ad Age Small Agency awards in Portland, Ore., where Dan Wieden addressed the crowd:
“You should be sharpening your knives,” he told the hundreds of small agency executives in attendance.
I believe the term he used to describe the giant agencies and their holding companies was “wobbling drunkards,” which, he said, are flailing to retain their margins in the Digital Age.
Two days later, Omnicom and Publicis announced their 70-gazillion dollar mega-merger. Wobble. Wobble.
Now I’ve got my whetstone out.
The merger was widely heralded as a complete surprise to the industry. This is not because Maurice Levy and John Wren are really good at keeping secrets. It’s because anticipating the moves of wobbling drunkards – and Wieden described the giant holding companies – is not easy to do.
As a small agency, how does this impact me? This move will probably give the Publicis Omnicom Group some additional leverage when it comes to negotiating TV buys, but I’ll let Sir Martin over at WPP worry about that one. I’m aware that AT&T isn’t going to shift its media buying to a small agency anytime soon – nor should it.
That said, there are three reasons I think this merger will benefit small agencies:
Reason #1. The Freedom.
The theme of Mr. Wieden’s talk was freedom. The freedom to fail. The freedom to dream. The freedom to take a different path.
Add to that now the freedom from the vested interests of the holding company. POGs (short for Publicis and Omnicom Group agencies) are already motivated to leverage the relationships, investments and proprietary trading desks of their parent companies. But those relationships and investments may not be in the best interest of clients. Further, the solutions those trading desks provide are formulaic and leave less room for innovation. Formulaic approaches lead to mediocre returns. Clients don’t get promoted for delivering mediocre returns. These challenges will only be exacerbated by this consolidation.
This provides an opportunity for small agencies to differentiate ourselves. While perhaps we can’t compete on the cost of every impression bought, we can devise strategies that focus on the value of every impression made.
More and more, brands are viewing small agencies as a viable alternative to big ones. Freedom is a key reason why.
Reason #2. The Fallout.
Pepsi and Coke may or may not decide to put their concerns about conflicts of interest behind them. Certainly some brands will – and others will not.
That means that inevitably, there will be some degree of shakeout. And, having just nabbed silver for Ad Age Small Agency of the Year in the West Coast region last week, I think it’s not too big a stretch to imagine that Traction might find itself in a review or three on some of those right-sized pieces of fallout.
Reason #3. The Message.
Perhaps the biggest reason I see this merger as an opportunity is the message it sends. This is a big story everyone is paying attention to, and it clearly underscores that there is a difference between big and small. Like so much of society, the rich get richer – and that’s not necessarily a good thing.
Banks gets bigger and not to the benefit of their customers.
Energy companies get bigger and not to the benefit of their customers.
Insurance companies get bigger and not to the benefit of their customers.
Agency conglomerates get bigger. Are clients likely to think things will be different this time?
I’m willing to bet at least a few will get the message. They’re welcome to give me a call.
Adam Kleinberg is CEO of Traction, an interactive advertising agency in San Francisco.
This story originally appeared in Advertising Age.
