Small Agencies

The future of small agencies

By Published on .

Ad Age

In 2016, John McKelvey and Hannes Ciatti left Droga5, one of the top agencies in the world, to start a new agency with a bold mission—to remain as small and focused as possible. "At Droga5, we were spending more time in meetings and less time at work," McKelvey says. "So we decided to form an agency in which we could just focus on producing things—setting it up with literally just the two of us and remaining true to our mission."

McKelvey and Ciatti, both 40, first met while working at an ad agency in Sydney, Australia in 2010, soon traveling to New York City to work for major agencies before starting their own company—and immediately landing a high-stakes campaign with Squarespace. Through a connection with the CCO of Squarespace, McKelvey and Ciatti were hired to create a spot centered around John Malkovich. At 62, the iconic character was embarking on a new career as a fashion designer and was making his company site on Squarespace. Going all in, McKelvey and Ciatti traveled to New Orleans where Malkovich was filming a movie, spending days with him to brainstorm ideas. At one point, the actor offhandedly mentioned he was struggling to secure his namesake website because someone had already claimed it—the story immediately giving McKelvey and Ciatti an idea. Using the premise, the duo soon partnered with director Miles Jay to shoot the ad with Malkovich in Paris, the 30-second spot depicting him trying to gain the rights to his eponymous site. Soon, the commercial became a sensation, appearing in the Super Bowl, winning an Emmy and selling out the spring line of Malkovich's collection—a massive success launching the small agency of John X Hannes in the process. "We kept the whole process lean and intimate, staying flexible to focus on the creative," McKelvey says. "It was total devotion with a small team and that's how we continue to operate—the whole thing is a bit of a dream run."

John X Hannes is at the cutting edge of a pivotal moment in advertising, one transforming the industry—the rising power of small agencies. Largely defined as having anywhere from a handful of people up to 150 employees, small agencies have historically been on the fringes of advertising. Often run by creatives who fled larger agencies for more artistic freedom, small agencies could produce good work but were unable to perform at scale, losing out to larger agencies who could handle the demands of major business. But, in 2008, the advertising world was transformed, the Great Recession decimating the more expensive agency-of-record model in favor of one perfectly suited to smaller agencies—the project economy. With less money to spend on an increasing array of online media outlets, major companies began hiring multiple agencies for campaigns, parceling off work on a project-to-project basis instead of relying on a single firm. Now, in this new marketplace, small agencies are at an advantage due to three major innovations that are increasingly changing the future of advertising—speed, specialization and the rise of creative. "I can't tell you how many times I've heard about the death of the independent agency," says Tom Finneran, an executive vice president of the 4A's. "It's all bullshit. There will always be a role for small agencies—and this shift from retainer to a project-by-project dynamic is playing significantly to their benefit."

The first innovation fueling the rise of small agencies is the increasing demand for speed-to-market campaigns—a change backed by new technology. Whereas agencies used to spend six to nine months on a campaign, launching and then assessing them, now, in this multi-platform landscape, the lifecycle of an ad can be incredibly short. Brands are looking not for the best or most well-known agency, but for the best idea—a campaign that can make a brief but powerful impact on social media to drive awareness. Working light and nimble, a small agency can create a top idea, pitch it, and then hire out additional freelance help as needed to pull off the project—executing the entire turnaround campaign in less time and for less money than larger, more unwieldy firms. Now, small agencies are even creating their own collaborative co-ops, shared spaces in which ad firms can work alongside other independent media companies, everyone collaborating on the fly. In El Segundo, California, Eric Johnson of Ignited agency created El Camp, a 50,000-square-foot space housing his agency alongside 20 different marketing, technology and media startups—everyone working independently and also together as needed to retain utmost flexibility and creativity. "Now, smaller agencies and larger agencies are all competing for the same jobs," says Rebecca Sullivan, a PR consultant. "Speed to market is important. Brands just want the best ideas for the best value—and small agencies can get something done quickly, efficiently and creatively."

The second innovation aiding the growth of small agencies is one that has always been a natural fit—the demand for specialization. By definition, small agencies have always had to specialize, a fact of life when you can't compete at scale with larger agencies. But with the increasing rise of new technologies and media platforms, specialization has taken on a new level of creativity. Now, small agencies are creating innovation labs, special operating units that invest in and experiment with different marketing-related technologies to develop new business models ahead of the curve. From Artificial Intelligence to virtual and augmented reality, larger independent agencies like Brunner in Pittsburgh and Barkley in Kansas City are pushing the boundaries of marketing, experimenting in digital media formats while figuring out how to monetize them. In Knoxville, Tennessee, the Tombras Group, an independent agency with 300 employees, created a division to focus on Amazon's search-and-display marketing services—even pioneering voice ads for products on Alexa. "Charlie Tombras, their CEO, saw that voice is going to become a major communication vehicle," Finneran says. "So he decided to get out in front of it—they're a bunch of smart folks."

The final innovation behind the rise of small agencies is also the most essential—the ultimate value of creativity. In many respects, technology has become the great leveler in advertising. Small agencies can hire freelance firms to supplement themselves in a variety of ways, including finding media-planning partners like MBuy to bolster independent campaigns with consumer analytics to prove value. Ultimately, in this project-to-project world, the win comes down to one simple truth—the quality of creative. Stripped of cumbersome procedures and overhead, small agencies can focus more on their creativity, devoting their resources to producing the best ideas. Whether embedding themselves in companies to truly learn their culture or experimenting with new technologies and markets like experiential marketing, small agencies are ideally suited to remain creative and thrive—a goal John X Hannes continues to pursue every day. In June, the small agency even won the Cannes Lions Grand Prix for a 43-minute film about a Dominican sex worker receiving a heart transplant—a piece sponsored by New York's Montefiore Health System that raised awareness for the brand, spotlighted the need for organ donation and showcased the power of independent agencies. "The new project-based economy is about finding the right project and then the right people," Ciatti says. "You have to be brave, take chances and do everything with passion—and in a small agency you can do the things you love."

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[PQ] "Brands just want the best ideas for the best value—and small agencies can get something done quickly, efficiently and creatively."

Rebecca Sullivan, principal of Rebecca Sullivan PR agency

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