NEW MARKETS NURTURE INDIE AGENCIES

By Published on .

Most Popular
If ever there were a region that could support an independent agency network it would be Asia/Pacific.

Virtually all independent networks with global aspirations have salivated for years over the local agency scene there and yet no network has pushed through its soil.

Now enter Partners in the Pacific, the region's first indigenous indie, formed by seven agencies in mid-'94. Partners has since expanded to a Vancouver shop, is seeking member agencies in five more countries, and won the Asian account for its first shared multinational client, Loctite Corp.

Indies have been cropping up since the first was founded in 1932: Advertising & Marketing International Network, Wichita, Kan.

Networks are generally sustained by participating agencies through initiation fees and annual dues, the latter tending to range from $1,000 to $17,000 per year-amounts determined by the level of influence and activity at the secretariats that govern most organizations.

These central authorities may provide member agencies discounts in market research, media buying and computerware; offer e-mail and Internet access; and even pitch systemwide accounts.

The indies, 22 of the largest listed in the accompanying Advertising Age International chart, have proliferated in the '80s and '90s as clients have entered relatively new markets in Asia/Pacific and Eastern Europe. Business opportunities have followed European Union expansion into Scandinavia and Central Europe.

Agencies have been encouraged by the EU to form European Economic Interest Groups, loosely formed federations that in time might emerge as single pan-European companies. The growing marketing budgets of EU institutions are a big incentive for an EEIG. An EEIG designation is believed to tip the hand of technocrats doling out the budgets.

Indies in general bill themselves as viable alternatives to the multinational agency groups, proudly proclaiming their grassroots orientation compared to the top-heavy multinationals. Yet without the acquisitiveness of the mega-agencies in the past two decades, most indies probably wouldn't have had the impetus to grow so rapidly. Growth, to a certain extent, came out of a defensive posture to protect home turf.

In contrast to multinationals, the indies are not burdened by bureaucracies, their managers are available to clients and they think globally but remain local, or so said Patricia J. Fiske, president of Affiliated Advertising Agencies International, Aurora, Colo., the largest independent network with collective billings of $3.4 billion from 92 agencies.

As the multis systematically blanketed the globe, indies responded by cross-pollinating with each other. These affiliations give region-locked indies global exposure. Most have taken place the past two years (see chart footnote).

Partners in the Pacific is at the right place at the right time. AMIN, Confrad, Dialogue, IN, IAIA, LIAN and the IFAA report they are scouring the Far East.

Partners' formation was a sort of homecoming for Grey Advertising alum. The idea for the pact was advanced by Bruce McDonald, formerly Grey Advertising Pacific region director. Several executives who had worked for Mr. McDonald during the '80s and had gone on to form their own agencies were seeking a way to get client support from "partners" they could trust in the region.

Agencies in Partners agree to support each other by taking referral fees and splitting commissions for common clients, typical of indies for what they call inbound clients.

The multis by no means sit passively while the indies scare up global clients. They continually position themselves in local markets, often buying up independent network-connected agencies.

IFAA, one of the larger networks, lost agencies in Chile, Argentina, Spain and Portugal to multinationals in '94. "You must expect this when you have some of the leading agencies in the market, particularly when the multinational's office begins to slip badly," according to IFAA Director Norval Stephens. That, he said, is the typical scenario.

The indies, too, must put up with a certain amount of defections. Once viable Alliance International Group, London, has gone on the skids losing agencies in Canada, Germany, Spain, France and the U.K., the latter two to other indies.

In this article: