At a recent meeting in Dubrovnik of public relations agency heads from nearly a dozen different nations, I was struck by the common emphasis on the importance of independence. At a time in our industry when it seems every firm is somehow owned or allied with one of the global behemoths, there remains a strong commitment to independence and a view of its inherent value for clients.
At the same time, another priority is emerging and that is the power of the network. While these two forces may seem at odds with one another, the discussion that took place during the meeting demonstrated that it is far from imperative that one be part of an Omnicomm or WPP, but one must be able to bring a global resource to the table when needed. And the occasion for that need is increasing.
So how to reconcile being part of a network without losing the value of independence? The answer is an international consortium of independent firms. Each firm retains its identity and maintains the client relationship, but also activates that specific portion of the network needed by the client and only when client requirements dictate. Thus, clients whose businesses span multiple geographies are ensured consistency of quality and the support of senior professionals without having to bear the cost, hidden in hourly rates, of operating the intergalactic mothership.
I confess to a bias in this discussion. I chair such a consortium of independent firms – ECP Global Communication – and have written on independence in the past. But as the discussion in Dubrovnik proved, I am certainly not alone in this view. Small and mid-sized firms in countries such as Hungary and Poland, the UK and Canada, not to mention our Croatian host, all confirmed an increase in client requirements for international support.
They all go a step further, however, in that they report frequent client dissatisfaction with such international support from the mega-firms. The model seems to be to impose on the client a requirement that they use the mega-firm’s partner agencies without consideration of whether those teams have the capability or industry experience to properly do the work. In the consortium model, the partner firm is only engaged if that capability and experience can be demonstrated. Otherwise, an alternate resource is identified. Absent the quarterly demand to report earnings to shareholders, the independents operate with far greater flexibility.
This requirement to meet shareholder expectations and pay dividends leads to another major problem the global one-stops prefer you ignore. Clients that have used the multi-nationals report an innate tension between their priorities and those of holding company shareholders. The latter seek strong quarterly returns, while the former may require a longer-term horizon. In Dubrovnik, the small firms unanimously reported accepting budget limitations or reductions from clients needing relief even as programs for those clients continued apace. The emphasis in the smaller firms was on long-term partnerships rather than short-term budget achievements.
Accepting reduced budgets might seem to suggest the independents are struggling financially. Quite the contrary. The firms represented in Dubrovnik, including members of ECP Global and also IPAN, another network of independents, reported strong results for 2010 and favorable forecasts for this year. Unlike 2008 and 2009, no one was talking about economic hardship.
While the purpose of the Dubrovnik colloquium was to share best practices, discuss issues of common importance, and identify priorities for small firms as they seek to sustain success in an intensely competitive environment, a number of themes emerged:
- The multi-national holding company firms are migrating down-market, pursuing the kind of smaller budgets that in another time would have caused them to make the face one gets when smelling dead fish. The belief among the Dubrovnik delegates was the big firms are hurting and going after whatever they can find to hit the performance criteria imposed upon them by their masters. While this heightens the competitive challenges for smaller firms, it more importantly calls into question whether the giants are making promises of attention to client needs they simply cannot economically deliver upon. The consensus in Dubrovnik – likely they are;
- Small independents continue to win business because they dedicate senior professionals to every client engagement and not just to the sales presentation. In one case, a firm president stated flatly he has no interest in growing his business above a certain level because he believes only at a fairly modest scale can he assure clients the level of attention and quality that is his hallmark. Imagine the wrath that would befall a multinational agency head who set his business model at “small and client-centric” versus “growth-oriented;”
- The market for small to mid-sized independents remains strong. In a field whose very name references relations, it is the relationships of clients and agencies that matter most and produce the greatest results. When those relationships are founded on trust, characterized by the daily involvement of senior professionals capable of delivering their counsel with both modesty and confidence, and informed by a common commitment to the clients’ business objectives, great things happen.
Across nationalities, the value of independence was apparent and affirmed at the Dubrovnik meeting. When these and other independent firms reconvene in Washington, D.C. this fall, it is likely the same principle will hold, specifically – The size of the firm, the cachet of its name, or the perceived benefits of its one-stop capabilities prove far less important when the CEO needs advice from a partner who understands his or her business.
