London's New Gold Rush

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"All you need to start an ad agency is a brass plaque and a phone. Any two fools can do it. And, quite often, they do." This delicious quotation is from Chris Powell, chairman of arguably the most consistent creative agency anywhere in the world over the past 30 years, London's BMP DDB.

It is particularly apt for a city where the advertising industry is continually regenerated by wave after wave of new startup agencies, each challenging the existing status quo. Most were founded on a belief that the process of advertising could be revolutionized in order to produce iconoclastic work. So marked is the trend that there is a distinct chronological pattern: the first wave (of the 1960s and early '70s), like Collett Dickenson Pearce, Saatchi & Saatchi and Boase Massimi Pollitt; the second wave (1980 to 1982), which included Abbott Mead Vickers, Lowe Howard-Spink, Gold Greenlees Trott and Wight Collins Rutherford Scott; and the third wave of around 1988 onwards, which features Howell Henry Chaldecott Lury, Simons Palmer Denton Clemmow & Johnson and Duckworth Finn Grubb Waters.

As the names got dafter and the brass plaques larger, so did the founders' pretensions. By the time we got to HHCL and shortly after, St Luke's (the cooperative agency that rejected the corporate tyranny of Chiat/Day and its Omnicom deal), some of them really did believe they were reinventing the wheel - or a least they claimed to.

The Mac, hot-desking, digital transmission, virtual offices, cellular telephones, no account people, the death of the 15 percent commission rate and the separating out of the media buying function were all contributory trends or factors behind the rash of new entities. Margaret Thatcher's support of the small-business entrepreneur was another driving force, but the largest single contributory factor was a rejection by agency executives, and - let's not forget - disenfranchised clients, who did not believe they were being well served as small pawns in the headlong rush to global consolidation.

For a while, however, there was a startup lull. In the early '90s it was recession-induced (when only Rainey Kelly Campbell Roalfe really made an impact), and then in the late '90s, who would choose to associate themselves with the Jurassic age of dinosaur ad agencies when you could be in the dot-com boom? Well, Mother, for one. And, I guess, you have to include the extraordinary group that is M & C Saatchi, the most successful of all startups in the shortest period of time.

But in the last three years, in addition to outsiders like Fallon and Wieden & Kennedy finally trying to get their acts together, there has been a host of new names: Soul, Miles Calcraft Briginshaw Duffy, Malcolm Moore Deakin Hutson and the three agencies featured on these pages. They differ from their predecessors in that their founders are not necessarily all so young, and they do not claim to reinvent the wheel. Largely unencumbered by media functions, with a lesser proportion of suits, they are nimbler and fleet of foot, and totally focused on the creative product.

In this respect practitioners and commentators alike believe London is among the major advertising markets, by far the most competitive. All the big agencies are capable of doing great work, and on a good day with a fair wind and a willing client, they do. The largest agency in London is arguably the most creative of the past five years, Abbott Mead Vickers BBDO. The key difference between London and the startup desert that is New York, the city with which it is so commonly compared, is of course scale. Accounts in New York, certainly national accounts, are quite simply larger. Clients have more at risk. They are simply not prepared to gamble on a startup. Even a relatively small $20 million to $30 million account in New York demands a level of service and structure that is prohibitive to the average startup. But, there is another key factor that few - certainly in the U.K. - will talk about openly: money. Let's be frank about this - sassy advertising people all over the world reject U.S. multinationals to forge their startups in the quiet hope of selling out to those same multinationals for a fortune, a few years down the line.

It's inevitable. There is a point in any career in the U.K. industry where the really successful executive is faced with an earnings ceiling if he or she chooses to stay within the business. That's why so many CEOs head over to top jobs in the U.S. market. And it's always why the U.K. startups so often include the type of A-list creative director (like Cannes Grand Prix-winner Charles Inge at Clemmow Hornby Inge) who is locked in by $2 million-a-year packages in the U.S.

So, when those London entrepreneurs speak loud and proud that "it's all about the work, luv," they are not lying exactly, just positioning their own companies within the market. It is, after all, what they are supposed to be good at.

CLEMMOW HORNBY INGE Launched: 2001 Principals: Simon Clemmow (TBWA, Simons Palmer Clemmow Denton & Johnson), Johnny Hornby (TBWA, CDP), Charles Inge (Lowe Lintas) First client(s): Carphone Warehouse, Liverpool & Victoria Building Society, The Daily Telegraph, Premier Brands, Tango

We all know those startups that result in a sharp sucking in of the teeth when the lineup is announced. But just occasionally there is the odd one that has success written all over it. Clemmow Hornby Inge looked most likely to succeed from day one. In a combination of principals that is pregnant with potential, Charles Inge's place assures a huge level of interest. Inge arrived having made a rare success of the merger of the Lowe Lintas creative departments in London, and before that having won the Cannes Grand Prix for The Independent newspaper's "Don't Do This" commercial, and the IPA Effectiveness Award for Tesco.

Nick Hornby was long regarded as one of the brightest younger suits in London. He had long since shrugged off the tag "Brother of the more famous Nick" (cult author of Fever Pitch, High Fidelity and About a Boy), running Honda at CDP and then becoming managing director of TBWA/London. He ran the Labor Party's account during last year's successful general election campaign.

Simon Clemmow is the curiosity of the bunch. One of London's best planners, he has done this before. In the late 1980s he was one of the co-founders of Simons Palmer Denton Clemmow & Johnson, which became one of London advertising's success stories before selling to TBWA in 1997. Most execs then sit tight through their earn-out period and either settle for a life of airport lounges on the international circuit, or sail off into the semi-retirement of dabbling with investments. It wasn't for Clemmow, latterly the TBWA CEO. "I didn't like the international thing, whizzing round on planes to international brand meetings, fire-fighting and preselling stuff," he says candidly. "It got to the point where I would walk into meetings and everyone would assume we were going to lose the business."

Hornby recalls new clients coming through the door at TBWA, and having to delegate them, in frustration, to other staff. So Clemmow and he would plunge into smaller accounts, like the Science Museum, for the mental stimulation - to the horror of the rest of the bottom-line conscious TBWA management team.

In classic advertising style, the duo were persuaded to actually set up on their own, while they were cruising on the yacht of the man who became their founding client! Charles Dunstone, entrepreneurial founder of the Carphone Warehouse retail chain, proved as good as his word - even delaying one of his own advertising campaigns to give CHI time to get off the ground. He also gave them free space for six months - in the offices where he first set up himself!

Clemmow and Hornby wanted Inge, but did not approach him first because everyone else said they would never get him. In unique London "community" fashion, Caroline Marshall, the editor of Campaign magazine, and Chris Powell, chairman of rival agency BMP DDB, acted as matchmakers. Inge had been approached about several startups before (including by Alison Hoad, now of CDD, see below). He didn't know the TBWA duo, so they went away together for the day, and then met Dunstone, a big fan of Inge's hugely successful "Every Little Helps" work for the Tesco supermarket chain. "They're simply the best people I have ever worked with," Inge says bluntly. "Being creative director of Lowe Lintas was better than I could have imagined, but Lowe is a very personal place. I said, 'I'm going on holiday for a week and then I'm resigning,' and then Frank [Lowe] comes back with the cash and everything. "

Inge is crystal clear on what the attraction of CHI should be to clients: "When you work with really good people you should be better than every agency in town. The offer to clients is the total commitment of senior people."

The trio point to a focus on getting back to doing the work as a prime motivator behind starting up. They also talk of the "inefficiency" of a big agency like TBWA - the product of perhaps five merged agencies - with many small clients paying little by way of fees and each expecting the likes of Clemmow on their business. They have a plan to run a different kind of business, but are anxious not to over-claim. They simply want to have 10 to 12 reasonable-sized clients paying decent fees that will enable the trio themselves to be able to contribute to each account. They also have a determined approach to getting better work out of client relationships. "We want to spend an inordinate amount of time upfront with our clients before we get to 'Every little helps,' " Hornby says. "Then, after that, everyone understands how to do a Tesco ad, or whatever."

Clemmow takes up the argument: "We have a real view on how to look for insights, dig for truths, look at the culture of a company, brand its culture. Being at the client's shoulder means not looking for a big ad idea, but a big brand idea, out of which the rest follows."

Hornby points to the combined 50 years' advertising experience of the trio as a cause for confidence that they will be able to spot a big idea: " We interrogate the product, interview the staff, interview the board and then will have a big brand idea for a company. If clients think that advertising is what suppliers do, then they're not for us."

This is typical of the extraordinary self-confidence that the trio radiates. They share an open plan room and clearly like each other immensely. Clemmow, having done it before, is the sage: "We know not to buy expensive coffee tables," he quips. They share quiet, but absolute, belief in Inge's abilities. When I visited them this spring, there were just 12 full-time employees and maybe eight semi-permanent freelancers. They too argue against traffic and a studio, pointing to the abundance of freelance talent out in the post-recession marketplace , which helps to resource a startup that already has six major accounts. Tango, their last major win, was one that really will put them under the spotlight. It has been one of the seminal accounts of the last decade; the brand that made HHCL's reputation and arguably introduced a wild new creative style to U.K. and world advertising.

But this threesome is unfazed. They are each clear about their minimum of five years' commitment to each other and their exit strategy. The energy of doing it yourself gives rise to chutzpah. It's best expressed through this story told by Clemmow. "We were going to fund the agency through our overdrafts, but Johnny actually asked our first clients to pay in advance!" he says incredulously. "Both Carphone Warehouse and the Liverpool & Victoria building society paid a quarter in advance. We got the first two checks, two weeks before we opened our doors! Our accountant said, 'But how on earth did you do that? ' We said, 'We asked.' "

CDD (Campbell Doyle Dye) Launched: 2002 Principals: Walter Campbell, Sean Doyle, Dave Dye, Caspar Thykier (all AMV BBDO), Alison Hoad (Lowe Lintas, Wieden & Kennedy, Procter & Gamble ) Founding client: Mercedes

It's not every agency startup that has Mercedes as its founding client. But then nothing about the CDD startup has followed the norm. Not least, this is already its second incarnation. CDD has three of London's more famous creatives in its name; it was formed by a group that sought to get away from Omnicom but has ended up being partly funded by Omnicom; it was stimulated by a renowned Italian creative (not an oxymoron); and includes a planner who had already been burnt by experiences in a previous startup.

Most curiously of all, however, the agency was at first partly the brainchild of Marco Testa, the Italian CEO of Armando Testa, the independent agency that bears his father's name. Testa was interested in yet another attempt to crack the London market.

The creative trio had in part produced some of London's more famous creative work of the past decade, including Volvo, Dunlop, BT and Guinness (Campbell was Tom Carty's partner on several Tony Kaye-directed collaborations), but they lacked any noncreative partners. So they set out to interview London, with everyone recommending the Lowe planning director Alison Hoad, formerly part of Wieden & Kennedy's first foray into London, and an ex-P&G client. "We had a blind date in a pub in Primrose Hill [in north London]," Dye recalls. "We were really nervous. She wasn't."

"To be honest, we were a bit naive," Hoad adds. "Our enthusiasm really overshadowed the contract. With Testa there was no guaranteed client list. But Marco wanted everyone to resign and get the news out ahead of Testa's IPO. They wanted a London Testa HQ. But the devil was in the detail. They were naive, as well."

Having launched with big fanfare in the U.K. media, the subsequent dissolution of the Testa relationship was temporarily embarrassing. "When it broke in Campaign, we thought we were like Muppets," Hoad admits. "Oh my God, did we look like idiots. But everyone came out of the woodwork to help us. Suddenly the big networks were calling, and it was a case of who did we want to go with. It was a fascinating experience, especially because we're at different life stages."

In the end, it was Peter Mead, the AMV co-founder, who put CDD in touch with Omnicom's CEO John Wren, now a minority backer. "Wren was very direct and Darwinian," Hoad says now. " 'You eat what you kill,' he said. He was very clear and entrepreneurial. If you do well, fine. If not, we'll be after you. He talked about having a creative beat at the heart of the company. He kept talking about the ads, the work. We really did our research the second time around."

Somewhat to the chagrin of some at AMV BBDO, Mead (with his Omnicom hat on) introduced CDD to Mercedes, and the rest is history. Mercedes has never really had the advertising its brand deserves in the U.K. - a problem and a brand that is manna from heaven for this particular combination of talents. "We don't want to just do an ad agency for the sake of it," Dye says with some intensity. "We have no weird angles on what we're doing. We just want to be really good. We want the work to be really good."

Dye and Hoad both speak of the planning process and the way an agency includes its clients in that process as key areas upon which they can improve on the rest of the industry. "One of the most amazing things when I was a client at P&G was being kept at arm's length by agencies from my own advertising," Hoad says. "Advertising as a business can be so uncreative. When I wanted to become a planner, for example, nobody would consider me.

"Agencies and clients all end up obsessing about process, filling in boxes," she continues, before adding with a twinkle, "Thankfully, at Lowe there were not really planning processes like that. You know, 85 percent of our clients were so relieved!" Dye takes up the theme: "A brief, our brief, is like a small box with three questions. And crucially, can you write the proposition in one sentence?"

Like CHI, this startup is also painfully aware through past experience that the potential for great creative work lies at root in just what sort of client the agency takes on. Thykier, a former new-business director, says agencies focus far too much on getting just any new business, when really the key to great work is matching up with the right clients. New business is a great drain on resources, he argues, and cites Mother as doing a great job on growing business organically.

The Mercedes campaign is just breaking as you read this. The agency is beginning to think about its second client, but it has no real aspirations to size. "The joy of a startup is that every client wins," Hoad contends.

"The problem is a lot of big agencies now just feel like each other," Dye says. "The work doesn't feel different from one place to another. "

You sense that CDD will try harder than most to stay very different. And, having tasted failure before they even began, they are unlikely to fail again. But, like all London startups, the measure will be the work.

VCCP (Vallance Carruthers Coleman Priest) Launched: 2002 Principals: Charles Vallance (previous agencies: WCRS), Rooney Carruthers (FCB/San Francisco, WCRS and Bartle Bogle Hegarty), Adrian Coleman (HHCL), Ian Priest (HHCL) First client: O2 (the relaunch of the BT Cellnet mobile phone network)

It's always tricky when the biter is bit. VCCP is the most significant startup to involve former WCRS employees in the 20 years since Robin Wight led his merry entrepreneurs into startup folklore. What was Wight's response? To put Charles Vallance, his former managing director, on gardening leave - paid, but not allowed in the office at WCRS or to work at VCCP (or to be in Creativity's group shot).

To be fair, this may have less to do with spite and more to do with the fact that Vallance is starting his agency with the enormous challenge of relaunching BT's Cellnet mobile phone network as O2, part of a far-reaching new pan-European cell network. With the U.K. portion alone worth more than $60 million, the account is in direct conflict with WCRS' own Vodafone client. Of course, Vallance, one of the brightest planners in London not to have crossed the Atlantic, also worked at WCRS on the agency's former client Orange, the cell phone network the agency helped build from scratch with his strategic input and ads created by, among others, his new creative partner Rooney Carruthers (who in a past life at BBH was responsible for Haagen-Dazs and Levi's "Swimmer").

The campaign broke on May 1 after teasers in April - a huge task for an established agency, let alone a startup that, when I visited them in the early spring, did not even have the brass plaque! It's all the more remarkable a story because the launch comes less than three months after Carruthers took a phone call from the client, Will Harris, asking him to crack a creative problem he believed that the significant talents at AMV BBDO could not. At the time, Carruthers, just back - as he himself says - with his tail between his legs from an unsuccessful stint as creative director at FCB/San Francisco, did not even have an agency with which to work. He was attempting in vain to crack the horribly oversupplied London commercials director market.

After the initial call to Carruthers, the agency had only two weeks to crack the idea, and then go on and sell it to not only the U.K. client, but to the French, the Germans and the rest of Europe. The agency has also managed to help set up, and liaise with, a network of disparate agencies on the continent to get the campaign off the ground. First of all, of course, he had to find his partners. Vallance and he were planning to launch together anyway. They soon found the ex-HHCL staffers Coleman (Guinness, Mazda, AA and Fifa) and Priest (Pot Noodles, Egg).

The fierce pace suits Carruthers, in particular. He says that he struggled in California largely because of the laid-back attitude, the lack of urgency (other reasons would surely include having to offer multiple-choice creative solutions). He says today that he wishes instead he had gone to work in New York. He is currently looking for an American partner, another radical idea for London. Carruthers concedes he would probably not have got a chance like O2 in New York. The agency came up with the creative ideas (in two weeks) and then has farmed out so much of the production elsewhere. "We're an ideas factory," Carruthers says. He argues VCCP won't need the traffic function, it won't need heads of TV, or IT, or personnel people. All of these functions will be farmed out. It sounds interesting, but one wonders how long before they become what they left behind.

"The industry needs regeneration," says Coleman. "The best thing about a startup is the energy that you bring to what you're doing. It's what happens to big agencies. You can't be the radicals when there are more radical agencies coming along. The startups are getting more experienced. They're not kids. And technology allows you to get up and running faster. Today, there is also an infrastructure of production companies and freelancers out there to help you."

"You can only be flavor of the month for five years," says Priest. "You can only be hot for five years and then live off it for a while." It still took some reassurance from the Cellnet CEO, Peter Erskine, a long-term associate of AMV BBDO chairman Michael Baulk, but he eventually convinced VCCP that the pitch was not a setup and that he would simply go with the best work. The four talk about setting up a brand that stands for something. Lacking a predetermined mission statement, that brand seems to stand for speed, intelligence, planners being part of the creative process and a great deal of client consultation up front. Refreshingly, VCCP is unashamedly marketing itself as an ad agency.

"I want to mix it up a bit, and enjoy advertising again," the no longer laid-back Carruthers says with disarming honesty. "I don't ever want to go back to being forced to do bad work."

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