Indie shops pick their spots

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Despite the perception that independent media shops lack the swagger and buying sway of the conglomerates' agencies, these free-standing shops are holding their own.

Actually, the indies say they are quite content with their place in the food chain-and most believe marketers are equally satisfied. Agency executives feel unbloated by overhead; unencumbered by potential marketer, parent agency or sibling-agency conflicts; and unconcerned that becoming "bigger" will drag seasoned senior executives off account work-and into "administrivia."

"There's always the perception that bigger is better," says Roger Schaffner, president-CEO of Palisades Media, Santa Monica, Calif., which lost the $180 Miramax account to Publicis Groupe's Zenith Media last April, but says it still logged $415 million in 2003 billings. "But clients like smaller shops, closer service, working with more senior staff. They weren't getting that before." Palisades' marketer list includes Electronic Arts, Lions Gate Films and Caesars Entertainment.

Two distinct camps have emerged in the media landscape. One is populated by major media planning and buying shops owned by ad agencies or agency holding companies. Executives with those companies have long argued their size and combined client billings result in greater buying clout with the media.

In the other camp are the independent media agencies, most notably the likes of Aegis Group's Carat North America (the biggest of the indies), Palisades and Horizon Media.

Talk to any independent shop and the first benefit to be mentioned is, frankly, indepen- dence. Indie media shops, they'll claim, have less potential for client conflicts arising from sibling agency rosters or new-account wins. And being independent and private, they're beholden only to partners and marketers-not holding-company parents, shareholders or even creative agency liaisons, notes Bill Koenigsberg, president-CEO, Horizon Media, New York. He scoffs at the notion that "independent" translates to "small." Horizon's billings are "inches away from the billion-dollar mark," Mr. Koenigsberg says, with marketers including Jack in the Box Restaurants, Geico, NBC Television Network, Ace Hardware and EarthLink.

It's clear in chasing the major blue-chip accounts with an eye on global expansion or marketing, the megashops often hold the upper hand. However, while larger independents enjoy billings that can lead to investments in research, technology and talent, ties to a corporate parent can potentially create conflicts and muddy an agency's loyalties, Mr. Koenigsberg says. Independence leads to a "clean canvas to focus 100% on what is best for the client," he says.

It's the independence that often leads to new ways of thinking, says Jim Surmanek, CEO of MediaAnalysisPlus, Chicago, an agency consulting and auditing operation.

Where big media shops tend to get formulaic in their approach by designing target audiences, for example, or selecting media mixes and executing media buys, small mavericks are getting more creative in their approach, he says. In the end, creativity and close account service from senior management will win-and win over-the marketer.

deeply involved

"Everybody seems to agree that all the big guys are doing things just about the same way," he says. "These [independent] agencies are deeply involved with thinking about their clients, holding their hands, ensuring service and being as good as they can be."

Moreover, the concept of media "clout" arising from conglomerates amassing multiple marketers' mega-budgets to curry favor and deals from media outlets is "overblown and inaccurate," Mr. Surmanek says. The key is not only how to "buy cheap," but how to get high value at an effective cost, he says. Coming away from the most recent TV upfront seasons, high prices reigned and conglomerates matched the figures, Mr. Koenigsberg notes.

"Look at the increases these gorillas paid in the upfront this year," he says. "There was the most consolidation in years, and the promise was that efficiencies were going to get better. The result was the highest prices paid."

Bill Price, chairman-CEO of Empower Media Marketing, an independent media shop in Cincinnati, knows the rates he garners for his marketers are "at parity or better" than other media shops using the same outlets. With accounts like Long John Silver's, USBank and Bush Brothers' Beans, privately held Empower outpaced 2003 projections, growing the business 10%, he says.

During a recent survey for Empower, consultant Joe Grant learned that what those marketers seek is what the media shops claim to provide-attentive service from a fellow business that can be classified as "medium-sized" in its own industry. From these "complementary" operations marketers find senior executives handling their accounts, which leads to a better understanding of business issues, Mr. Grant says.

afraid of getting lost

"Clients don't want to get lost in a mega-agency," says the president of Grant Consulting Associates, a Marco Island, Fla.-based consultancy that has done a half-dozen such reviews for indie media shops.

Several common weaknesses have emerged from these reviews-issues that could be attributed to both owned agencies and indies alike. One is the lack of inherent independent market knowledge about a marketer's business, Mr. Grant says. By not specializing and competing for any account that comes up for review, media shops might lack specialty in that area, he says.

The second issue is how smaller agencies working with smaller budgets aren't funded to make as many market trips to learn about media nuances in key client markets , he says. And without a supporting revenue stream coming in from a creative sibling, media stands alone in revenue generation, Mr. Koenigsberg says.

"Medium clients have medium budgets," Mr. Grant adds. "They don't have the money to fund as many market trips."

more nimble

Yet such weaknesses are offset by an independent shop's ability to be more "nimble" in reaction to marketer needs, he says. "They don't have the bureaucratic overhead to navigate through. They can react very quickly."

Being nimble and marketer-focused alone won't keep indies thriving, warns Paul Woolmington, CEO of the Media Kitchen, New York, a media joint venture between the former vice chairman of WPP Group's Mediaedge:cia and Kirshenbaum Bond & Partners, which recently sold a majority stake to MDC Partners. The acquisition will change nothing about Media Kitchen's indie status, he boasts.

Smart agencies need to create new media opportunities for marketers, says Mr. Woolmington, whose shop handles the Song airline, USA Network, Citibank and Brown & Williamson Tobacco Corp.

Entrepreneurial thinking was what Tim Mapes sought when he steered Song's media account away from Starcom and landed it at Media Kitchen.

What he got was the Song in the City experience store in Manhattan, M@xRacks postcards and skywriters over the Hamptons, Boston and Los Angeles scripting "Wish you were here. Flysong.com" in the sky. These weren't mass-market messages. The discount airline was creating a "found brand" among affluent influentials who could then sway peers' opinions, says the upstart airline's managing director of marketing.

As Delta Air Lines' former director of advertising, Mr. Mapes knew that thinking wouldn't come from other media shops he'd worked with like Zenith and Starcom.

"We were looking for the anti-agency," Mr. Mapes says. "We wanted a level of entrepreneurial thinking. We wanted non-traditional, solution-neutral media. We got overall media thinking that isn't centered on a 30-second spot."

Erwin Ephron, a partner at New York media consultancy Ephron Papazian & Ephron, concurs. The conglomerates' focus on TV as a primary ad medium will ensure a place for those shops that look for other media opportunities, he says.

"There's always room for a smart, counterculture media agency," he says.