“What do you need to start an ad agency? One individual with a laptop,” an advertising industry veteran told Financial Express in a recent interview. It’s no surprise that a slew of independent agencies have sprung up over the past few years even as larger agency networks are nervously looking over their shoulders.
Vaishakh Jhunjhunwala, a former Leo Burnett and Scarecrow M&C Saatchi hand, lists two things going in favour of smaller agency brands. One, the business model of smaller agencies is built on more undivided attention and less fees. Two, indie agencies also keep way lesser margins when it comes to production costs like ad shoots and photoshoots compared to big networks. Since margins are more in control, bottom lines are healthier. The emphasis shifts more to the ‘bottom line’ than the ‘top line’. Many agencies are exercising this control in different ways like looking at equity shares in a brand rather than taking home a fee upfront.
They build lean and agile teams to service and handle the client’s account that helps bring down the cost drastically. “Even clients find comfort in the fact that they can pick up the phone and directly call the founder, instead of some AVP or VP who will probably take ages to get back with solutions for a relatively small problem,” says Mohit Ahuja, ex-president of Gozoop Group and co-founder of MAGIC Network.
Even until a decade ago, large and network agencies had a significant upperhand over their smaller colleagues. They had command over better resources and technology and could hire superior talent. Smaller agencies simply didn’t have the wherewithal to compete.
With the fragmentation of media and the spread of technology, the playing field has levelled out. “Bootstrapping has given us full control over our product,” says Shweta Barthwal, co-founder and director of operations of five-year-old Ridge Brand Studio. “We can hire the right talent and invest in systems that help us achieve peak efficiency. We also see this helping us in the longer term because almost 95% of our clients today are through references.”
A key reason the Davids have been able to stand up to the Goliaths of the industry is the availability of open data and research. Earlier premium research reports and insights were a luxury only deep-pocketed ones could afford. Digital platforms such as Statista and Euromonitor now offer a vast array of data and analytics, some of which are free.
But do big network agencies consider the indies a threat? They do, says Joybrato Dutta, executive creative director, Mullen Lowe Lintas India. “They are doing bold work and things that have more potential to become viral,” he says, adding the established are adapting with the changing times. “Most now have a special department for digital and tech-related advertising. They are creating teams that have a good mix of tech experts and creative minds,” he adds.
Can the Davids take the fight to the next level? Or are they looking to simply cash-out when the agency brand reaches a certain size? Isaac Jacob, Professor Emeritus at K J Somaiya Institute of Management, says success, in this case, is not really a straight line. “India is a huge country, with 22 scheduled languages and many dialects, and for a national agency its 28 states must be covered on a granular basis. This may perhaps be one of the biggest restrictive factors for these one-laptop agencies and that drawback will eventually show.”
As the industry continues to shift, one thing is clear: it will require more than gumption and agility to keep the lights on.