Commentary by Jonah Bloom

New York Ad Agencies Seize on Need for a New Model

Amalgamated, Anomaly, McGarry Bowen, Mother, Nitro, Powell and Taxi Among Newcomers

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While the incoming tide of consumer control and wave after wave of media fragmentation have left many large broadcast-dependent ad agencies looking slothful, defensive and ill-suited to marketers' needs, a new generation of shops proves change can be opportunity.
Jonah Bloom, editor of Advertising Age.

At the risk of jinxing New York's chances of getting itself an agency to rival San Francisco's Goodby, Portland's Wieden, Minneapolis' Fallon or Miami's Crispin, the Big Apple seems to be at the core of the movement. Apart from the fact NYC plays host to BBDO, the large agency most likely to prove it can change its 30-second-centric structure, and to Fallon's New York office, where Ari Merkin does his big thinking, the city has become HQ for start-ups.

List of hot start-ups
The list includes Amalgamated, Anomaly, McGarry Bowen, Mother, Nitro, Powell in New York, Strawberry Frog and Taxi. They have a few things in common other than location: They all sprang up in the last 18 months; none of them felt compelled to encapsulate what they do in a meaningless brand statement; and they have almost all managed to attract at least one leading marketer. (Between them they lay claim to business from Coke, Miller, McDonald's, Masterfoods, Unilever and Verizon.)

There the similarities end, as this lineup has a pretty diverse range of business models. McGarry Bowen, for example, is a throwback to the supposed halcyon days of spot-making, a traditional ad shop where the mantra seems to be "have fun," but the key is meticulous account management, persuading clients to pay for experience, and a cost structure unencumbered by holding-company overhead.

In contrast, Anomaly decries tradition and craves revolution. Its real selling point is that its

Even the graphics on Strawberry Frog's Web site mock holding companies: A fleet-footed frog darts away to stand on its own, leaving a herd of ponderous dinosaurs behind in the distance.
principals have diverse skill sets in interactive marketing, media strategy and design as well as advertising so that clients can have faith they will get a marketing solution rather than an ad campaign.

Mother's quiet side
Mother feels different again, partly because it is an offshoot of one of London's hotshops, partly because it differentiates itself by breaking down the detrimental divide between the people who live the client business -- the account managers -- and the creatives who produce the work, and partly because in direct contrast to the aggressive pronouncements of Anomaly it has been almost eerily quiet. The assumption by many is that Mother is quiet because it has nothing to say, but people who know Mother say this couldn't be further from the truth.

Why should you care about these new kids on the block? Because the success or failure of these agencies will offer clues as to the future of the agency model, and because their existence and ability to win business despite rampant overcapacity in the marketplace speaks volumes about the state of the business.

It says agencies can no longer rely on AOR relationships to sustain them; it says that size and distribution capacity are no guarantee of success in a world of well-developed media-agency networks; it says marketers are desperate for fresh thinking and aren't getting enough of it at their existing shops; it says some are fed up paying for resources they don't use.

Good news, or a death sentence
Last week, as he announced strong fourth-quarter earnings, Omnicom chief John Wren remarked that it is good news that money is moving away from TV commercials, because his agencies make better margins on other types of work. Looked at another way, traditional 30-second-centric agencies are in a diminishing, increasingly commoditized business. Those with new models will agree this is good news, but for those unable to change their cumbersome structures, it sounds a lot like a death sentence.

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