NEW YORK (AdAge.com) -- Think the recession now whipsawing the agency business has killed off their international aspirations? Think again.
There's a new vision of what it takes to be a global agency player taking shape today, and it's a far cry from the 100-office goliaths birthed during the ad business' Jurassic Age.
Havas' Arnold, now with added international ambitions, is looking to expand its global footprint to 10 or so countries. MDC Partners' Crispin Porter & Bogusky is trying on an even daintier size. Its purchase last week of a Swedish digital shop that'll become its European outfit is both Crispin's first real leap abroad and quite possibly the next-to-last step in its international expansion.
"It's probably possible to run things out of Boulder/Miami 24 hours a day, in some sort of shift work but there aren't that many people in advertising that want to work the late shift," Crispin top creative Alex Bogusky last week told Ad Age sibling Creativity. "Ultimately, our thinking has been we're going to need three [this European office being No. 2], possibly four factories, max, to have a CPB open and available wherever a client might be."
This strange breed of post-post-post-Fordism aside, what's vastly different today is the leaner strategy that they are using to broaden their geographic profile. Where the regional hubs crop up is changing too; not in the biggest markets like China, necessarily, but in places like Prague and Gothenberg, Sweden, home to Daddy, the digital agency Crispin bought.
Getting it right
"Fundamentally, the strategy of building a global micronetwork was valid," said David Jones, worldwide CEO of Havas, which nine years ago botched an attempt to mold Arnold as a global network. "Where Havas failed was on the execution. A bunch of people sat buying agencies without understanding what they were doing or having a coherent plan."
"I wasn't very involved in the international effort about nine years ago," said Arnold CEO Fran Kelly. "At the foundation this time is growing with our clients."
One Arnold client, Volvo, has requested increased global creative and strategic support from the agency, and another, spirits giant Brown-Forman, now see more than 50% of its growth outside the U.S. Arnold's Ocean Spray juice account has begun getting traction in Europe, and Hershey -- among the most underdeveloped internationally of all the major confectionary companies -- has also signaled it wants global support.
So Arnold, which has three offices on the East Coast of the U.S. and one in London, is going to open in Prague in about a month, where it has seen uptake for Brown Forman's Jack Daniels brand. It's also eyeing Portugal; Sao Paolo, Brazil; Madrid; and Milan. All told, Arnold thinks it will have a presence in about 10 countries -- half what it had planned back in 2000. Mr. Jones describes these cities among a group of "very interesting places in the world that are part of the new generation of creative cities."
The new geographical agency landscape also means future global networks won't necessarily be led out of traditional strongholds like New York or London. Rather, they might be exported there. Take for instance WPP-backed Santo, the hotshop that started in Argentina but launched in London last year, or Sid Lee, headquartered in Montreal and now expanding into Europe.
How the global agencies are structured will vary, and models abound -- from the dozen or so traditional networks such as BBDO and McCann Erickson to owner-operated global networks such as Worldwide Partners and Magnet, and more radical approaches such as online marketplace OpenAd.net.
But for agencies going global today, the notion of hundreds and hundreds of "nameplate" offices their predecessors set up is unthinkable. They will go in a few select locations where there is more demand and less overhead. Ask R/GA Chairman-CEO Bob Greenberg, and he'll say: "You don't have to be everywhere."
Still, even as the head of a leading digital shop, he's keenly aware that technology doesn't mitigate the need for boots on the ground. Mr. Greenberg notes there will never come a time when agencies can circumvent time-zone issues which can hamper the way they manage clients.
"Some clients can have a single office agency to manage multinational business," said Ken Robinson, principal at Ark Advisors in New York. "Often times they use their media agency as a distribution network, and sometimes it's more important to have their media companies be local and manage those local market nuances."
A local presence is also necessary to navigate language, cultural sensitivities and nuance in creative taste. But where there's broad agreement is that there's not room for any more 100-office shops -- in fact, some believe there's already an oversupply of such networks. Consider that the world's biggest holding company, WPP, alone has four sprawling networks in Ogilvy, JWT, Grey and Y&R, some of which boast of 500 or so offices.
"If the economy continues to contract, we will start to see some consolidation among the traditional multinational networks," said Al Moffatt, president-CEO of Worldwide Partners. "The strong markets cannot support the weak markets anymore."
"Certainly if you were going to set out to build a global agency model today, you wouldn't build the global distribution models," said Nancy Hill, president-CEO of the 4A's, the trade group for ad agencies that recently opened up to international members. "The most interesting -- I'm not saying this is the only way -- is the micro-networks, with strong offices in regions, as opposed to countries. The work that has come out of BBH, Wieden and to some extent Fallon is always really strong."
"The way that we're doing this is going to be one of the most popular models for every agency," said Mr. Greenberg. "They will eventually come to figuring out that they have to do some version of what we are doing, Crispin is doing, or [ Goodby, Silverstein & Partners] is doing,"
R/GA's strategy in the near-term is to get its San Francisco, New York and London offices coordinated, but thereafter it is planning to enter a few select markets such as Mumbai, Moscow, Shanghai and Sao Paolo. When it does, R/GA will likely replicate the method it used to open in London, leaning on parent Interpublic Group of Cos.' to take space in any of its agencies until it has the legs to open on its own.
"We don't intend to build a lot of bricks and mortar, but we do intend to have activation capabilities in local markets. ... We don't do any rollups or acquisitions, period. That doesn't fit our model. But that doesn't mean that that's not a great model for Crispin." Goodby uses "a model where they job out a lot of interactive but they do it extremely well," Mr. Greenberg said.