Compared to rest of world, New York is a start-up desert

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It's the question I dread from all non-U.S. contacts: "So, what are the hot new shops in New York?" I grimace painfully, "... um ..." a little, and then, when I can prevaricate no more without appearing the world's most clueless marketing journalist, mumble, "There aren't any."

My inquisitors look at me askance, resolving silently to ask someone who really knows the U.S. market. But I beat them to it. A highly scientific straw poll of the two groups who need to know-Advertising Age journalists, who want to write about them, and worldwide agency CEOs, who want to buy them-revealed: there aren't any. "Any" means plain, simple advertising start-ups, not the innumerable dot-com start-ups that have come and gone.

Some people shout Cliff Freeman, Kirshenbaum & Bond, or Dweck, but these are, in advertising terms, near-institutions. Even the last-named was already nine years old before it called it a day just over a week ago. They are/were hot, perhaps, but they are no more new than a Wieden & Kennedy or a Goodby, Silverstein & Partners.

In the last 18 months, the only notable start-up in New York has been Bouchez Kent, a breakaway from Bozell, which is a handicap in the hot stakes right there. It has not yet set Manhattan on fire, which is not to say that it won't. Winning the Nasdaq account, for which it is short-listed, would be a start.

Randall Rothenberg argued in his column last week that the last recession killed off the start-up in New York. Others say there is over-supply-does Madison Avenue need another ad agency? But there is even more of a boom-bust cycle in Europe, where the 1989-91 recession felt more like 1988-1993, and both London and Paris need another ad agency like they need another rock and roll/Buddha-themed restaurant.

Nevertheless, agencies start up continuously across the Atlantic. Even conservative Germany nourishes the new: Hamburg's Grabarz & Partner recently stunned the industry there by landing some major Volkswagen business. In France, Louis XIV powers ahead with brands such as Audi, Johnson & Johnson, Neutrogena and Givenchy. Amsterdam, too, has seen both KesselsKramer and 180 flourish.

London is start-up heaven. It's worth quoting that wise owl of British advertising, BMP DDB Chairman Chris Powell, who says "any two fools can get together and buy a brass plaque and start an advertising agency" before, typically, skipping a beat and observing dryly, "and they often do."

Perhaps. But while New York was a desert, agencies such as Rainey Kelly Campbell Roalfe, Mustoe Merriman Herring Levy, Mother, and Miles Calcraft Briginshaw Duffy became real entities, winning both business and awards recognition. Rainey Kelly even completed a seven-year cycle selling up to Young & Rubicam. There have been media independent start-ups, too: Michaelides & Bednash, Unity and Naked. Still more recently there have been the creative agencies, Soul and Clemmow Hornby Inge, both of which are pregnant with talent.

Why do start-ups flourish in London or Paris or Brazil (where both Age and Neogama are off to flying starts) and not in New York? It's not the recession; it's absolutely not that there are fewer entrepreneurs. In truth, it's all about scale. There's too much at stake in New York. The numbers are too great. Caution prevails; it's business not art. Even if there were clients ready to try a hungry start-up on a smaller brand, that "smaller" brand may require greater resources than a start-up can muster.

Plus, the rewards for staying on in New York big agency life can be enormous. You don't have to start up an agency, go through all the pain of doing it yourself, and establish your principles and values only to prostitute them before the giant conglomerate to which you sell. In New York, you can get wildly rich by staying at Y&R. But I bet you won't have as much fun. There are no hot start-ups in New York? How I'd love to be proved wrong.

Stefano Hatfield is managing director and editorial director of Ad Age Global.

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