On Independence

4th of July fireworks
4th of July fireworks
4th of July fireworks by Stefan Ogrisek

“…once again we are seeing disappointing growth for many of the industry’s flagship agencies — and particularly those owned by the larger holding companies. It’s not entirely clear why this should be. Perhaps they are restricted from expanding their offering out of a concern that will cannibalize sister agencies; perhaps their sheer size makes them less flexible or less nimble in times of rapid change; or perhaps holding company profit targets make it more difficult to make the necessary investments. Whatever the cause it is clear that they are losing market share to midsize and independent firms.”

                                             – Paul Holmes in the Holmes Report World Report

Perhaps it’s all of the above. And more. Could this be the era of the independents?

We hear repeatedly from former “big agency” clients and employees that firms owned by holding companies cannot match the agility and superior client service offered by independent agencies. They cite things like senior level involvement, personal accountability and responsiveness as hallmarks of independents that are hard, if not impossible, to find within large conglomerate firms.

Further, from the employee standpoint, the flexible work environment and collaborative spirit found within the walls of independent firms can be hard to find elsewhere. It is these characteristics that make an independent firm an enjoyable place to work, resulting in happier employees and healthier client relationships.

Finally, there are financial components that cannot be ignored when comparing independent firms with agencies that are owned by holding companies. It is these considerations that can have the greatest influence on the choices clients and employees make about where they want to spend their time and money. For example:

– Independent firms invest profits in their teams and clients rather than turning margin over to a parent company for acquisitions or unrelated efforts in far-flung corners of the world. Some call this the “conglomerate tax” and it can be deadly to motivation.

– Independent firms can find the right partner for the right work. Agencies owned by holding companies are required to use sister offices when work needs to be done in other parts of the world. Independents have the freedom to examine the market and select the right team with the right capabilities. When the work is done the client can turn off that expenditure rather than covering all that overhead, all the time.

– Independent firms can take the long view. Success for us is measured over years instead of quarters. Holding company-owned firms regularly suffer from staffing reductions, travel restrictions, salary freezes and any number of other measures to reduce overhead in order to meet quarterly forecasts or make up for losses in another agency on the other side of the world. While independents are not immune to cost-cutting, they can make moves gradually over time.

As we enter the Independence Day weekend, I raise a cold one to our fellow independents. May we live long, prosper, and continue to gain market share.

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