They have long been dominated by their bigger, more famous cousins but small and medium-sized agencies have fresh, new value proposition that makes them more viable competitors.

1. Big
Value:
A
Study
of
Small
&
Medium
Sized
Adver8sing
Agencies
SWYSTUN
COMMUNICATIONS
June,
2014

2. On
May
8,
2014
it
was
reported
that
the
proposed
Publicis-­‐
Omnicom
merger
would
not
proceed.
The
reasons
included
regulatory
approvals,
leadership
succession
and
taxaDon
issues.
John
Wren,
CEO
of
Omnicom,
cited
divergent
cultures
as
a
primary
reason,
“There
are
strong
corporate
cultures
in
both
companies
that
delayed
us
from
reaching
an
agreement.”
The
culture
conundrum
is
a
lesson
that
is
constantly
relearned.
The
combined
balance
sheet
may
look
great
but
if
the
combining
cultures
do
not
mix
then
the
majority
of
benefits
envisioned
fail
to
materialize.
I
learned
this
firsthand
as
a
strategic
consultant
at
Price
Waterhouse
who
ensured
a
focus
on
cultural
integraDon
when
advising
on
mergers
and
acquisiDons.
MarDn
Sorrel
of
WPP
had
firm
views
on
his
two
compeDtor’s
intended
merger
and
did
not
hold
back
from
offering
comment
when
it
fell
apart.
What
failed
to
be
noted
during
these
high
stakes
maneuverings
to
be
ever
bigger
was
the
WPP
strategy
of
buying
small
to
medium
sized
businesses
specifically
in
digital
and
emerging
markets.
The
holding
companies
have
largely
combed
the
globe
and
have
already
snapped
up
the
larger
agencies.
1
Analysts
suggest
growth
in
adverDsing
will
come
from
small
and
medium
sized
agencies,
as
well,
as
digital
and
analyDcs
specialists.
Many
of
the
smaller
agencies
toil
in
near
obscurity
but
when
discovered
they
reveal
aUracDve
aUributes.
They
possess
a
combinaDon
of
entrepreneurial
zeal,
high
levels
of
client
service,
innovaDve
passion
and
scrappy
creaDve
talent.
They
are
far
from
complacent
and
wake
each
morning
to
the
realizaDon
that
there
is
no
room
for
coasDng.
In
May,
2014
Swystun
CommunicaDons
conducted
a
research
study
of
small
to
medium
adverDsing
agencies.
The
study
was
funded
by
a
private
equity
firm
who
is
buying
assets
in
the
category.
With
permission,
we
were
allowed
to
share
a
porDon
of
the
study
including
trends
and
insights
that
challenge
the
commonly
and
historically
accepted
percepDon
of
these
players
in
the
industry.
Cheers!
Jeff
Swystun

3. We
surveyed
850
agencies
online
receiving
502
responses.
The
25
quesDon
survey
was
completed
by
agency
owners,
leaders
and
senior
execuDves
in
the
United
States.
Responses
Employee
Size
109
1-­‐10
323
11-­‐75
70
76-­‐150
Telephone
interviews
were
carried
out
with
willing
parDcipants
post
survey.
The
report
referenced
secondary
research.
AdverDsing
InspiraDon
Board
2

4. 3
Contents
SecDon
1:
Advantages
|
Disadvantages
SecDon
2:
Challenges
|
OpportuniDes
SecDon
3:
The
Big
Learning
SecDon
4:
Insights
SecDon
5:
In
Conclusion

5. SecDon
1:
Advantages
|
Disadvantages

6. Top
5
Reasons
Clients
Choose
Small
to
Medium
Sized
Agencies
1. Responsiveness
2. Client
care
3. Agility
4. Content
over
creaDve
5. Willingness
to
build
the
business
around
them
5

7. Associated
comments
from
survey
parDcipants
“Most
of
our
clients
and
prospects
claim
that
size
doesn’t
maUer
then
they
ask
us
about
how
many
offices
we
have,
total
number
of
staff
and
more.
But,
if
we
win,
we
win
based
on
the
quality
of
our
ideas
and
the
chemistry
we
create.
Not
dots
on
a
map.”
“We
become
defacto
employees
of
our
clients
without
losing
our
objecDvity.
It
may
sound
old
school
but
we
know
each
other’s
kids
birthdays,
support
each
other’s
chariDes.
We
invest
in
the
relaDonship
and
that
is
appreciated
and
valued.”
“In
my
twenty
year
career
I
have
never
worked
for
a
giant
agency
but
the
one
consistent
thing
I
have
heard
from
clients
who
have
worked
with
all
sizes
is
that
inevitably
the
big
guys
will
let
you
down
in
service.
Small
fries
cannot
let
that
happen
given
the
client
poreolio.”
6

8. Top
5
Reasons
Clients
Do
Not
Choose
Small
to
Medium
Sized
Agencies
1. Ability
to
stay
on
top
of
trends
2. Research
and
analyDcs
depth
3. Proving
return-­‐on-­‐investment
4. Geographic
reach
5. Resource
scalability
7

9. Associated
comments
from
survey
parDcipants
“There
is
no
way
we
can
claim
that
we
do
the
full
soup
to
nuts
when
there
are
nine
people
in
our
agency.
Anyone
who
tries
that
is
flirDng
with
disaster.
Like
any
business,
smaller
agencies
have
to
ride
a
credible
point
of
difference.”
“Clients
are
way
more
sophisDcated
now
than
even
five
years
ago.
This
is
saving
everyone
Dme
and
money
in
the
client
courtship
and
servicing.
ExpectaDons
set
at
the
beginning
make
for
a
happier,
longer
and
more
producDve
relaDonship.”
“We
love
to
compete
and
we
love
to
delight.
We
don’t
care
who
we
come
up
against.
We
will
put
our
ideas
up
against
anyone’s
and
we
will
be
clear
on
how
we
can
creaDvely
execute
through
partnerships
and
other
ways
to
be
big
without
charging
big.”
8

10. SecDon
2:
Challenges
|
OpportuniDes

11. Top
Challenges
Facing
Small
to
Medium
Sized
Agencies
1. Staying
on
the
cuing
edge
of
technology
2. InvesDng
for
growth
3. Balancing
new
business
with
service
4. AUracDng
the
aUenDon
of
agency
search
consultants
5. Overcoming
the
“generalist”
sDgma
6. CompeDng
with
larger
agencies
7. Client
success
(they
get
big
–
they
go
to
a
bigger
agency)
10

12. Associated
comments
from
survey
parDcipants
“I
omen
think
we
are
our
own
worst
enemies.
We
allow
ourselves
to
be
measured
and
compared
against
bigger
players.
The
reality
is
our
work
is
first-­‐rate,
our
clients
happy
and
profitable,
and
our
margins
are
awesome.
We
should
be
the
benchmark.”
“We
are
sDll
having
to
tell
prospecDve
clients
that
we
do
a
lot
more
than
tradiDonal
stuff
for
the
local
car
dealership
or
chain
of
drycleaners.
We
are
forty
people
in
one
office
and
have
been
working
with
a
European
retailer
based
in
Paris
and
a
South
American
liquor
company.
It
is
frustraDng.”
“Big
or
small,
whatever.
We
are
both
in
a
volaDle
and
fickle
industry.
It
is
a
jaded
category.
We
all
take
risks
but
the
one
difference
I
have
noted
is
my
bets
are
huge.
Dumb,
poor
bets
by
the
big
boys
can
be
distributed
or
absorbed.”
11

13. Top
OpportuniDes
Facing
Small
to
Medium
Sized
Agencies
1. Leveraging
agility
and
flexibility
2. Culture
supporDve
of
risk
taking
3. Select
consolidaDon
that
actually
benefits
clients
4. AUracDng
talent
craving
a
collegial
culture
5. Finding
an
aUracDve
niche
6. TranslaDng
passion
into
profit
7. Featuring
senior
level
aUenDon
to
clients
12

14. Associated
comments
from
survey
parDcipants
“We
are
new
idea
incubators.
We
just
need
to
find
a
way
to
moneDze
it
more.
I
see
bold
collaboraDons
with
clients
in
the
future
where
we
build
businesses
together.”
“Do
you
want
to
bust
your
ass
in
NYC
or
San
Fran
for
long
hours,
a
compeDDve
paycheque
and
the
promise
that
one
day
you
will
be
unceremoniously
dumped
by
people
less
talented
than
you?
Or
do
you
want
a
forty
hour
work
week,
challenging
work
on
cool
clients,
and
more
say
in
your
desDny?”
“We
will
buy,
we
will
combine,
we
will
grow
but
I
am
scared
that
we
will
sacrifice
a
bunch
of
our
special
sauce
along
the
way.
At
some
point
in
business
we
confused
bigger
with
beUer
and
that
ends
up
leading
to
the
same
bowl
of
slop.”
13

15. SecDon
3:
The
Big
Learning

16. The
debate
has
become
boring…..
Historically,
the
small
versus
large
debate
has
had
two
primary
threads.
Small
to
medium
sized
agencies
have
been
characterized
as
faster,
more
nimble
and
lower
in
cost.
Larger
agencies
were
seen
to
be
safe,
possessing
broader
services
and
geographic
advantage
but
were
slow
and
expensive.
How
uIerly
boring.
The
debate
should
focus
on
smarts,
creaDvity,
ingenuity
and
the
ability
to
conceptualize
and
deliver
big
ideas.
Not
to
menDon
the
intangibles
of
relaDonship
chemistry
and
tangibles
of
claimable
results.
15

17. The
value
proposiDon
has
changed…..
This
research
reveals
a
three
alteraDons
in
the
debate.
First,
crea8ve
quality
has
greatly
improved
in
percepDon
and
reality
in
small
to
medium
agencies.
Next
is
a
shiN
in
focus
to
content
crea8on
versus
creaDve
for
creaDve
sake.
This
is
aUributed
to
the
inDmacy
small
and
medium
agencies
enjoy
with
their
clients.
These
two
developments
coupled
with
the
longstanding
advantage
held
by
smaller
agencies
when
it
comes
to
client
service
and
the
whole
value
proposiDon
has
changed.
This
is
substanDated
because
price
is
talked
about
less.
Clients
prize
quality
and
are
willing
to
pay
whoever
provides
differenDated
value.
16

18. SecDon
4:
Insights

19. Insight
One
No
Longer
Generalists
The
percepDon
that
small
to
medium
sized
agencies
will
do
whatever
work
comes
in
the
door,
that
they
only
do
tradiDonal
adverDsing
and
that
they
play
it
safe
is
fading.
These
agencies
are
specializing
more
and
more.
They
are
focusing
on
depth
in
industry,
in
service
and
in
medium.
This
is
nuanced
as
becoming
too
specific
sDll
can
result
in
missed
opportuniDes
but
they
realize
pretending
to
be
something
to
everyone
is
inauthenDc
and
unsustainable.
VS.
18

20. Insight
Two
Too
Much
Me
Too
Swystun
CommunicaDons
works
extensively
with
professional
services
including
adverDsing
agencies.
If
there
ever
was
an
irony
in
the
business
world
it
is
how
poorly
these
agencies
are
at
differenDaDng
themselves.
Mike
Fromowitz,
President
and
Chief
Brand
Officer,
Mantra
Partners
contends,
“CommodiDzaDon
may
be
the
biggest
threat
facing
ad
agencies
today,
and
yet
we
hear
precious
liUle
about
it,
and
few
are
taking
strategic
acDon
to
combat
it.”
Small
to
medium
sized
agencies
need
to
get
beUer
at
their
own
branding.
The
vast
majority
seem
to
encapsulate
their
difference
in
the
same
vague
claim,
“Big
agency
experDse
with
bouDque
service
quality.”
19

21. Insight
Three
Loyalty
Rules
20
Big,
medium
or
small
agencies
all
want
to
hold
onto
a
client.
The
same
goes
for
acquiring
new
clients.
Yet,
there
is
a
nuance
claimed
by
small
and
medium
agencies.
They
believe
that
a
sale
is
something
that
happens
when
your
are
already
deeply
immersed
in
serving
the
client
and
that
new
business
is
not
a
one
Dme
event.
This
focus
on
service
has
been
a
longstanding
differenDator
for
smaller
agencies
and
it
has
manifested
itself
in
a
culture
of
nurturing
client
relaDonships
for
the
long
term.

22. Insight
Four
Not
Credited
with
InnovaDon
Long
accused
of
being
followers
and
emulators
of
larger
agencies,
increasingly
small
and
medium
agencies
are
proving
to
be
hotbeds
of
innovaDon.
These
agencies
are
adept
at
turning
client
requests
into
new
lines
of
business,
and
trends
into
revenue,
yet
sDll
suffer
from
a
percepDon
of
only
offering
tradiDonal
services.
21

23. Insight
Five
Where
We
Are
Heading
22
Survey
respondents
and
interview
parDcipants
were
largely
in
agreement
that
the
status
quo
was
not
an
opDon.
Small
and
medium
agency
leaders
idenDfied
two
growing
opDons
for
survival
and
growth.
The
first
is
to
assume
the
role
of
valued
“General
Contractor”
whereby
they
act
at
the
center
of
a
hub
of
different
agencies
that
delivers
on
a
range
of
services
to
clients.
The
other
development
is
not
new
but
is
taking
new
forms
and
that
is
consolidaDon.
This
presents
an
irony
as
combining
for
size
takes
away
from
what
made
these
agencies
successful
in
the
first
place.
SDll,
new
models
of
any
shape
and
size
may
be
just
what
are
needed.
As
John
Winsor,
Chief
InnovaDon
Officer
at
Havas,
points
out,
“Agencies
are
typically
closed
systems
that
are
being
challenged
by
open
systems
and
an
open
way
of
doing
things”.

24. SecDon
5:
In
Conclusion

25. Owners
and
leaders
of
smaller
agencies
are
bullish
on
their
future.
They
are
recognizing
the
change
in
the
value
proposiDon
but
need
to
creaDvely
rebrand
to
take
advantage.
Size
of
agencies
will
always
be
a
consideraDon
but
new
models
that
deliver
scale
without
comprising
quality
and
cost
present
the
greatest
opportuniDes
to
compete.
23

26. Get
In
Touch

27. We
invite
you
to
get
in
touch
to
discuss
your
strategy
and
branding
&
markeDng.
We
also
assist
startups
and
ambiDous
businesses
to
get
to
the
next
level.
This
involves
venture
capital,
private
equity,
joint-­‐ventures,
acquisiDons
&
divesDtures.
Needless
to
say
businesses
with
strong
brands
have
much
more
leverage
in
any
transacDon.
Lets
have
a
chat.
416.471.4655.
25