How big can big get?

Why does business mergers occur? It should be a I’m-good-at-this-you’re-good-at-that-so-let’s-get-together kind of relationship.

But in the case of Omnicom Group acquiring Interpublic Groupe, it is very difficult to really differentiate between the two entities getting together (give or take a few billion dollars). So then, why did they take the plunge? 

Simply, or perhaps simplistically, put, it’s business. And it’s a business that has been under growing pressure from emerging technologies as well as emerging independent agencies, coupled with an increasingly fickle client mindset.

Goliath stumbles as David takes aim

Over the past several years, a market condition has slowly emerged. It is one where chunks of businesses and projects from large agencies are being chomped off by smaller and supposedly cooler agencies; or to use a term they are getting rather fond of, studios.

This isn't something that would not have gone unnoticed by the those residing in the stratosphere, far above the daily struggles of an agency or studio to get their work out. And so, the empire strikes back.

And how do they do that? Not by a call to creative arms or by strengthening the steadily, sometimes violently, depleting talent at large agencies, so they can go back to what originally made them great and show the young upstarts why they are the biggies. No, sir. They do it by getting together and putting a good, old fashioned squeeze to then watch and see who and how many survive without bursting.

After all, the bigger agencies can always offer to do more, more and more, for less, lesser and least. And now a Group, raised to the power of two, does not actually have to make money from the work it creates.

Instead, they can give it away for free and their agency could also be at a loss. And still in the bigger picture, make it back from their media agency. Or their activation agency. Or their PR agency. Or one of the many new agencies they seem to launch every year.

A client would have to be very evolved, strategic or secure in their place of work to be able to justify to themselves and those around and above them, why they should pay a pretty penny for an agency to do the work when they can get it for almost nothing along with the usual media spends that they would have to spend regardless. How many such clients do you know would make that choice?

Make way for what matters the most—creativity

Where does this leave the independent agencies or studios, those who are still working on that old fashioned revenue model of trying to make money from the creative? In spite of the doom and gloom that I have spread so liberally above, the silver lining is that a clear distinction is emerging in the creative business.

There are those who believe that creative is still what leads the business, and then there are those for whom the creative is but a prologue to the real business.

This is not to say that there aren’t big agencies who do a lot of tremendous work. It just means that the ones at the top of the groups that own them are not betting on creative for the future; they are betting on an increasingly automated creative offering, with services around it.

So, it is critical for independent agencies to do almost the opposite of their approach. They need to double down on their creative output and the people who make them, by utilising technology and AI to create as differentiated a creative product as possible.

This can be insightful work; work that is funny, weird, gorgeous or heartfelt. It can be whatever they like, but it should be work that’s never homogenised.

Us versus them

If there is a choice to be made between independent studios and the networks, then let it be as distinct a choice that can be made. Day or night, comic or calculator, US or Iran. 

Because no matter how big or powerful agencies and groups become, ultimately, it boils down to the work that a client will chose. And it is to that person that we must give a solid, clear reason to choose us. Not just for the quality of the work (which is always a perspective), but also the quality of what that work achieves (which cannot be disputed).

This might mean some of independents have to get off their pretty horses and get down and dirty to solve the big, ugly problems that their clients face. But if they manage to do that, over and over again, in ways that is fresh and surprising, then no matter how attractive the pricing that the supergroups give, the independents would still have a compelling USP. 

At the same time, it does not mean that independents will win every battle and pitch, or even every other one. But they will win enough; enough to not just survive and keep their noses above the water, but to thrive. Enough to punch above their weights and numbers. Enough to dream of offices in far off lands.

And who knows, perhaps even enough to be seen as valuable enough assets for potential mergers and acquisitions ourselves. But certainly, and most importantly, enough to keep being relevant in this tough old profession.

- Sayantan Choudhury, senior partner, Animal.