While there’s some truth to indies thriving at the expense of network shops, Co:definery’s research shows that in fact it’s between agency disciplines where marketers see the greatest difference in value.
Given many clients’ pandemic-powered need to pivot, agencies of all shapes and sizes have been forced to work faster and more flexibly than ever.
In that context, it’s no surprise that many independents are claiming ‘agility’ as their USP, while decrying the networks as slow, bloated or even dying. It certainly makes sense that they might often be more naturally nimble than their larger cousins, so it’s become an easy narrative to sustain.
Indeed, while indies have picked up various high profile clients in recent times, the network shops – or rather the holding companies – are forced to air their understandably downbeat numbers in public. So it’s tempting to imagine that the headwinds faced by all agencies are mainly slowing the larger players.
But how real is that? To find out, Co:definery teamed up with creative leadership specialists Curve and research agency BAMM to explore marketers’ attitudes towards their agencies – in particular their views networks and independents.
The findings tell a far more nuanced story.
Our research started by asking clients whether network vs indie was even a factor in who they worked with. That was a resounding ‘yes’. Only 16% said it didn’t matter – less than half the 33% who said the distinction was critical.
Interestingly, only 22% of clients who actually use indies said ownership status was important, whereas 56% of those using network agencies said it matters a lot. Similarly, the higher the client’s budget, the more that ownership matters.
All this stands to reason – higher spending clients often need scale and geographical breadth, which of course are tangible points of difference for network agencies (the clue’s in the name).
So in short, size does matter – no sniggering at the back – and indies vs networks is definitely a thing.
Having established that ownership counts, we asked how clients had changed their perceptions about networks and indies in the 2-3 years prior to Covid-19.
Perhaps surprisingly, this is good news for holding companies – 28% of clients said network agencies had become more attractive, whereas only 18% said the same of indies.
This contrast is even greater for clients with higher budgets, who are far more likely to be using network agencies. Not only did 54% of those marketers say that networks had become more attractive, but 62% said indies had become less so.
So rather than signalling a stampede from networks to indies, in fact the greater growth in positivity flowed the other way.
To understand this shift in attitudes, we asked clients what they want from indies and network agencies.
By some distance, the most important quality for network agencies is ‘breadth of service’, with 33% of clients citing this as their key factor. For existing users of network agencies, this increases to 40%.
Interestingly, for clients also using indies, while breadth remains networks’ most important quality, at 30%, ‘access to top talent’ is the joint-top answer. Perhaps those clients have grown used to having founders on their account?
Turning to indies, as we might expect, clients see their most popular quality as ‘speed, flexibility and agility’, as chosen by 31% of marketers. Perhaps tellingly, this increases to 36% amongst clients also using network agencies.
Here a subtlety arose amongst clients of indies – at 35%, ‘track record in my industry’ was cited as an even greater factor in indies’ appeal than ‘speed, flexibility and agility’.
Might sector experience be more of a given amongst larger network shops? Or could indies be working on more innovative projects, with clients particularly seeking provenance from within their own market?
This importance of ‘breadth’ to networks and ‘agility’ to indies is where our research most supports the prevailing narrative. But how has the pandemic impacted these evolving preferences?
Having faced so much disruption in the last year, we asked marketers how their perceptions of networks and indies had changed since March 2020.
Starting with the independents, overall 47% of clients reported no perception change. For those already using indies, ‘no change’ remains the most popular answer. But for those marketers also using networks, 48% said that indies have become more attractive. So not good news for networks.
When we asked about perceptions of network agencies since Covid-19, ‘no change’ is again the dominant response, regardless of whether clients were already using networks or indies. That said, 26% of the latter also said that networks are now less attractive.
So the pandemic has driven a greater preference for indies, albeit as a measured shift rather than a fundamental market realignment. But what’s driven this change?
Having previously explored the most attractive agency qualities prior to Covid-19, we also asked clients which had become more important since the pandemic began.
Alongside ‘quality (i.e. of people, thinking and work)’ and ‘track record in my industry’, clients of both agency types told us that ‘speed, flexibility and agility’ has become their priority.
So while network agencies’ pre-Covid trump card of ‘breadth of service’ has dropped right down the client wish-list, the independents’ prized asset of ‘speed, flexibility and agility’ has jumped to the top.
Looking at the highest spending clients reveals another interesting finding. For these marketers, there’s also a pronounced increase in the importance placed on ‘access to top talent’.
So the message is clear – with clients urgently needing to pivot, they want to work with the best people who can also bring relevant experience.
As well as positive criteria, we also wanted to understand the perceived challenges that clients face when working with different agency types.
Looking at network agencies first, across the whole sample, value is the biggest issue, with 35% of clients complaining that the ‘results don’t justify the fees’. Amongst clients using indies too, this perceived absence of value from network agencies rises to 48%. And for marketers who are already using network agencies, their being ‘slow to take on feedback’ ranks just as high.
But before independent agency leaders get too excited about this whiff of bloat and slowness, how do clients describe their challenges?
Across all marketers, the top criticism of indies is being ‘slow to take on feedback’. For those clients working with indies, the ‘results don’t justify the fees’ comes joint top. And for clients also using network agencies, these top indie frustrations also include a ‘lack of sector understanding’ and ‘lack of proactivity’.
So while issues around money and listening to feedback are consistent across all agency types, this proactivity complaint might particularly sting for indies, who consider it a key component of their agility.
Bottom line: it’s tough out there and no-one’s getting off scot-free.
To explore how frustration informs intent, we asked clients which marketing disciplines they were most likely to switch – firstly from network to indie and then vice versa.
At 26%, both Digital Product/Service Design and CRM are most likely to be moved from network agencies into indies. Design and Search/PPC are close behind.
Existing clients of network agencies echo the overall story, with Digital Transformation (e.g. digital infrastructure, tech, e-commerce) also ranking highly. This is consistent with marketers already using indies – Digital Product/Service Design and CRM are still most likely to be reviewed out of networks, with Media now close behind.
Interestingly, for clients already using independent agencies, Digital Transformation is far less likely to be reviewed out of a network. Perhaps frustrated clients of network agencies only imagine the grass will be greener until they’ve seen what awaits.
To complete the picture for network agencies, what are their ‘safest’ disciplines? The least likely to be switched to an indie are Advertising, PR, Experiential and Social Media.
So what about the reverse journey – which disciplines are independent agency clients most open to moving to a network?
Although Digital Transformation and CRM rank highly again, at 28% it’s PR that shoots to the top of the indie frustration league table. That’s bad news for independent PR agencies. Research then completes the top four.
Drilling into the data again, for marketers also using network agencies, PR and Digital Transformation still rank highly. But with 40% CRM is the most likely to be moved from indie to network. For clients currently working with indies, PR remains out in front (or rather behind), with Research and Experiential also showing marked rises up the likely-to-review list.
The disciplines least likely to be shifted from indies into networks are consistent with the opposite journey. Advertising and Social Media remain ‘safest’, but are now joined by Media – so that’s good news for media independents. These rankings are similar across clients who use both indies and networks.
This research demonstrates how the pandemic has impacted client needs, but there’s no single story about how networks and indies have adapted and prospered.
Although there’s some truth in certain generalisations – including tangible differences like geography or group-wide media buying – the reality is that context is everything.
Marketers need different things at different times – especially since Covid-19. With lockdown causing an urgent refocus on digital, no wonder personalised, data-driven disciplines like CRM and Digital Product/Service Design are most likely to be reviewed – into or out of both agency types.
Similarly, more creatively-driven disciplines like Advertising, Experiential and Social Media are less likely to be moved. Perhaps they’ve offered both indies and networks the opportunity to showcase their flexibility.
So what now? Given the pre-existing talent, societal and workplace changes that all agencies were facing within the evolving digital economy, once lockdown lifts, clearly we won’t return to the ‘old normal’.
Will network agencies die? No. Are they changing? Absolutely. Will large clients always need scale? Almost certainly. But with digitally native independents gathering breadth and momentum, marketing and procurement people have more options than ever before.
For all agency leaders, the lesson from lockdown is that demonstrating expertise matters. Being generic and timid will make you invisible – to talent as well as to clients. So whether you’re an indie or a network, the race is on: differentiate or die.
Robin Bonn is the founder of agency management consultancy Co:definery and a columnist for Marketing Week. You can reach him on robin.bonn@codefinery.com.