Why midsize is the right size
Whenever I hear Hotwire described as a midsize agency I consider it a badge of honor. We’re big enough to give ambitious CMOs and others on the client side the national and international support they need. But we’re certainly not a cumbersome behemoth like the world’s largest PR networks.
It’s a good place to be. And clients frequently agree that midsize is the right size.
For supporting evidence, look no further than The Holmes Report rankings of the world’s top 250 PR firms published earlier this year. This found that fee income growth across the world’s top 10 PR firms was a mere 0.9%. By contrast, the average growth rate for midsize firms was 6.1%.
In other words, the midsize band currently enjoys a fee income growth rate more than six and a half times greater than that of the Top 10. What does that tell you about whose model seems to be working and whose does not?
One of the drivers of growth for midsize firms has been the falling away of the old Agency of Record paradigm. Rather than put all their eggs precariously in one basket, brands increasingly looking to work with a variety of agencies. Some refer to this trend as ‘projectization’. Whatever you choose to call it, it’s by no means unique to clients from within the technology sector.
Lufthansa’s Vice President of Marketing, Alexander Schlaubitz underlines the point in a recent interview he gave to Marketing Week in the UK. The airline marketing chief had this to say about it: “we always have multiple agencies in this massive convergence game that every campaign represents.”
Naturally, the decline of AOR exclusivity opens up opportunities for midsize agencies to come and work with larger brands. These opportunities were previously out of reach because ‘smaller’ agencies lacked the resources to service a mega-corporation’s entire business. But winning sizeable chunks of business from large clients has propelled midsize agencies into offering more strategic services and a greater breadth of services than ever before.
As a result, at Hotwire we’ve become more potent, more rounded, more relevant.
For a long time, the scale and global reach of the behemoth agency networks made it appear as if these multinationals were the gold standard. But I don’t believe that bigger is always better. If it were, we’d be inhabiting a world without liposuction and the very popular Keto diet. A world in which exciting start-up businesses could never succeed.
Hotwire itself, like the myriad success stories to emerge from Silicon Valley, has shown that challengers can upset the status quo. If I have a rallying cry for my colleagues, it’s this: use your size as a weapon! Don’t aspire to be like the big guys…be better.
As the Holmes Report figures illustrate, the market is readier than ever for brave agencies with a fresh philosophy. Agencies willing and able to challenge ingrained traditions and business habits (like timesheets and hourly rates) that may be outdated…even irrelevant for today’s pace. The big networks have had a tough time shedding tired habits and stale practices. Nimbler, open minded firms can adapt more easily…if like us they’re willing to blaze a new path.
How, though, can agencies outside the top 10 or 20 really challenge the dominance of the networks and offer something different that works? I believe there are three key areas in which challenger agencies can excel:
- Upping your game
- Adopting a sensible scaling strategy
- Providing a truly different perspective to the conventional’ network agency manifesto.
Although we’re putting more pressure on the big agency players, we take nothing for granted. We must continually up our game if we’re to attract the best talent and develop ambitious, adventurous work that delivers the results clients demand.
One of the great selling points multinationals supposedly have in their favor is the promise of implementing cross-border campaigns through smooth multi-office collaboration. Unfortunately, the reality is often very different as various offices or teams with separate P&Ls fight for a share of the spoils. Our scaling strategy however is based on a single P&L supported by financial models that ensure our people work together in a way that serves the best interests of our clients. That’s important because internal squabbling over budgets is the enemy of great work.
We live in an era where companies are either disrupting or being disrupted. Not only tech companies; all types of business are looking to build value by leveraging the innovation and technology aspects of their brand. As a result, they are becoming more open to hiring agencies with a track record of working with disruptors. There is a growing appetite to look beyond the status quo for a different perspective. And that appetite bodes well for midsize agencies.
We know we can support our clients with the necessary talent, creativity and reach. Which means we truly are the right size.