In 2011, Global Brands Think Small

As we enter a new year, we’re seeing several major trends emerge in the digital marketing space.  Over the next few weeks, I’d like to share my thoughts on several of these, and would welcome your comments and additional insights.

The first thing I’d like to discuss is the question “does size matter?”  Although the answer is sometimes yes, we see a growing trend of large marketing corporations turning to smaller agencies for creative or specific channel leadership.

We have also seen several related trends – very senior creative directors leaving long-established roles at large agencies to join or establish small shops. The reasons may vary in the exact words used, but the trend is that innovators or creatives want to be unencumbered by large agency complexities and politics. For example, after just two years as chief creative officer at the New York office of Saatchi & Saatchi, Gerry Graf left the Publicis Groupe shop to start his own agency, saying, “There’s a type of creative agency that I want to make, and it’s not going to happen here. So, I’ve got to leave to make it.”

Former Crispin Porter + Bogusky executive John Winsor recently opened Victors & Spoils in Boulder, Colo., which has virtually no staff and “operates on the principles of crowdsourcing.”  Since its launch last year, Victors & Spoils has brought in major accounts including General Mills, Harley-Davidson, Oakley and Virgin America.

Facing issues with procurement, cost structure and lack of innovation, large agencies are struggling to keep pace with the rapidly changing digital landscape. Danielle Sack, in her recent Fast Company piece “The Future of Advertising,” explains that many CMOs are now shunning “agency of record” relationships – the long-term, retainer-based deals that have been the bread and butter of full-service firms. Many are shifting to smaller firms that are generating big ideas, yet operating with minimum overhead by outsourcing non-creative elements such as digital production, which can account for up to 60 percent of total campaign effort.

Take Google for instance – AdAge reports that the company is increasingly entrusting marketing projects to a collection of smaller outfits, like Johannes Leonardo and Big Spaceship out of New York and Cutwater, Goodness Mfg., Muhtayzik/Hoffer and Muhtayzik/Hoffer on the West Coast. The “Tech Titan” seems to favor the smaller, and often more nimble, creative firms that have an easier time keeping pace with its product/services marketing needs.

As we move forward into this new era of advertising, I suspect we’ll see more and more of this happening. Danielle Sacks paints an interesting picture of the potential future of our industry, saying, “It’s easy to imagine a new advertising ecosystem of pods built around industry stars who have left their lumbering institutions behind. The holding companies will still exist, but around them could emerge a chaotic pattern of startups, independent talent, and connectors who thrive with minimum overhead … It would be harder work, with fewer assistants and fewer million-dollar paydays. But this smaller business would be aloft on its new creative potential rather than sinking under the weight of its past.”

The challenge for small digital shops is how to execute on a large scale for the large clients now engaging them.  A growing number of these agencies are turning to outside partners with specific implementation skills and cost control. And in turn, a growing number of these outsourced partners are leveraging near shore and off shore talent.

Former U.S. Army Chief of Staff, General Eric Shinseki, may have said it best when he remarked, “If you don’t like change, you’re going to like irrelevance even less.”