State of the State
In this age of mergers, takeovers and aggressive acquisition by international mega-agency groups, what are the survival chances for the small to mid-sized agency? We’ve asked four members of the Atlanta ad community to comment on the present and the future of independent ad shops.
We questioned: Rena Kilgannon, President/CEO of Kilgannon McReynolds; Robert McNeil, President of IMAGES USA; Joanne Truffelman, Chairman, T.G. Madison; and Guy Tucker, an agency headhunter and consultant for Ask Guy Tucker.
Are the big agencies buying or selling Atlanta? Are they staying or leaving?
KILGANNON: "As long as there’s business and talent here, they’re buying. As evidenced by Grey buying 360. Why bother [making the purchase] unless they saw this was a good place to grow."
MCNEIL: "Although some large agencies are more committed to the market than others, I think they are always going to view Atlanta as an attractive advertising market. The number of companies who are headquartered here or have regional offices makes us a lucrative market."
TRUFFELMAN: "I think they’re buying. In the last couple of years, Interpublic has taken over four ad agencies in Atlanta. I don’t think they’re walking away by any means."
TUCKER: "They want to stay and grow their business. In some cases, there seems to be an inability for them to compete because of conflicting client rosters with other branches of the [parent] agency. That creates a challenge in getting new business."
What are advantages of being independent?
KILGANNON: "There’s a lot more flexibility and maneuverability than most big agencies. You can be flexible within your client base and the services you offer."
MCNEIL: "The primary advantage is we make our own decisions, so we can always do what’s best for the client. We don’t have to work within a larger consortium or network of companies. We can choose who we want to do business with and who we don’t. We don’t have as many conflicts as national agencies."
TRUFFELMAN: "That entrepreneurial spirit. You don’t have to watch out for the bottom line only. We’re all out to make money, but there are times you make decisions for long term purposes and we may not be able to do that if we were taken over by a conglomerate."
TUCKER: "The ability to pitch a variety of business because you’re not restricted by a sister agency that already competes. They also have the ability to move quickly because they don’t have to discuss every issue and need with the home office."
What advantages does an advertiser get by signing with an independent agency?
KILGANNON: "They get less bureaucracy. The feedback I get from clients is [independent ad agencies] are more nimble than large agencies, who sometimes get tangled in their own underwear. In some cases they get just as good – if not better – service at less cost to them. Independent agencies have a tendency to scramble and find resources locally."
MCNEIL: "In a larger environment, there are more layers of bureaucracy involved in the creative process. In a smaller agency, there’s more freedom to be creative. A lot of clients have specific needs and a limited budget. They need a cost effective supplier of these needs. Because we’re a smaller company, we don’t carry the large overhead or fixed cost that a lot of larger companies do. Some clients look for agencies to grow with them. I’ve seen smaller agencies be more aggressive in growth oriented goals and compensation programs."
TRUFFELMAN: "The advantage is the creativity is better. In some agencies, it’s not about creativity, but all about the bottom line. Because of that, creative people prefer to be with an independent agency. There’s less of a process to go through because there are fewer ’Big Guys’ who need to give approval, so the turnaround time on an idea is shorter."
TUCKER: "Along with possible cost savings, [clients] have the ability to speak directly with the decision makers at that agency, which would be an advantage for a certain size client."
How do you keep your independence?
KILGANNON: "There’s a lot of talk about agencies joining forces, so that together, they can be attractive bait for a large agency to swoop in and swallow them up. I prefer being independent and not having a master to answer to or worry about the stock price being affected by negative revelations from other offices. I just worry about my clients and my employees and like it that way."
MCNEIL: "It takes a commitment and pure willpower. When potential buyers approach us, I tell them for now, we’re focused on building our own business. We’ll consider a strategic alliance, but not an offer to sell our agency."
TRUFFELMAN: "An entrepreneur in any business may some day want to sell out. But, you want to stick to your philosophy and do well by your employees. We’re in a very unique business and therefore we don’t want to sell to just anybody. You may refuse to sell to those who approach you or keep a lower profile. In many respects, we’re able to bring on very good staff people because they know the ‘Big Guys’ are not looking over their shoulder."
TUCKER: "You can be so lousy that you’re off everybody’s radar and no one wants to buy you; or so good that your ability to remain nimble, financially strong and creative allows you not to rely on a large holding company for their deep pockets."
Will Atlanta continue to support independent ad agencies?
KILGANNON: "This is a great place for young people to come and start companies. Over the years, a lot of the small independent agencies have prospered and grown. I started with two people, I have 23 people now. It’s taken me 15 years, but it’s been slow, steady profitable growth."
MCNEIL: "Atlanta is a thriving market with a thriving economy. The city encourages a dynamic business outlook which favors independent agencies."
TRUFFELMAN: "I think there’s always going to be a need for small to medium size agencies because we’re in a city that requires them to handle local and regional business. There’s a need for traditional agencies, but a lot find niches in terms of the kind of client they attract or the kind of advertising discipline they have. There’s always going to be a need for the entrepreneurial approach. Clients like that as well as the agencies."
TUCKER: "Atlanta has always had and always will have strong independent agencies run by smart nimble people who have the entrepreneurial spirit."