"Big agencies are much maligned ... despite what Campaign and Ad Age would love to suggest, Goliaths are picking up share while the Davids are really under pressure, particularly as credit markets remain frozen." That was Martin Sorrell a couple of months ago in Brand Republic asserting that big global ad networks are doing better than their smaller national rivals.
You would expect that to be true. Firstly, because it's Sorrell saying it. Whatever else you may think about the WPP chief, he knows his industry numbers and macroeconomic trends. Secondly, it just sounds right. Large marketers are in consolidation mode right now, paring overstuffed, overcomplicated rosters. Ad Age has reported on purges at Coke, A-B and P&G, to name just three.
In fact, most marketers we speak to want a single, full-service marketing agency with strong ideas that can improve its business and an ability to execute regardless of discipline. They believe it'll likely lead to reduced agency fees, less time wasted managing complexity (and egos), stronger partnership and, maybe, better marketing efforts.
But months of data collection and analysis by the Ad Age DataCenter yielded little to prove that the bigs grew at the expense of their smaller rivals last year. Some global networks fared surprisingly well in 2008, like Y&R, which somehow piled on almost 8% growth. Others, like Ogilvy, actually lost revenue, and most managed growth in the 4% or 5% range. How does that compare to their midsize, one-or-two-office brethren? Well, in the U.S., Crispin Porter & Bogusky and Wieden & Kennedy grew more than 20%; Goodby, 7.5%; Martin and Cramer-Krasselt each about 6%.
Overall, as our story on the Agency Report notes, U.S. agency revenue for the Big Four holding companies last year grew 3.8% -- about even with growth for the whole universe of U.S. agencies up 3.7%. In other words, big and small fared very much alike, statistically speaking.
OK, but what about 2009, when the recession went from nipping at our heels to biting off limbs? Well, it'll take a while before we'll get the picture, but the anecdotal evidence still doesn't seem to support Sorrell's theory.
Last week I spoke with two large marketers, both top 20 global advertisers, who talked about consolidation. And in both cases more of the business they're consolidating will go to single-office agencies, like the aforementioned midsize national players, than will go to large global networks. As one of them said, "I don't need 100 offices working on my business. I need one good one." And there are others, like Walmart, who've been going the opposite direction, expanding their rosters -- generally with smaller, local shops.
Even those advertisers that do feel they still need a big global network are often unimpressed by the cohesiveness of what they end up with.
Perhaps more importantly, some find that the big agencies frequently appear to have more difficulty offering a creative, discipline-neutral (or "full-service") approach than their smaller counterparts. Many still seem to be wrestling with silos -- most of the big shops still have a separate digital and direct agency P&Ls -- fiefdoms and systems set up to generate certain types of creative, while many of their smaller counterparts have woven digital marketing -- and sometimes also PR, data analysis and even product design -- into what they do on a daily basis.
So, Mr. Sorrell, it's not that we would "love to suggest" anything -- we have no horses in this race -- but more that we just don't see the big global networks markedly outperforming smaller rivals right now, either in terms of their work or their results.