THE MARKET : Ad Agency Sale Now On, Sale On Now

AdMedia, Feb 1, 2007 by Peter Vegas

In recent years new technology and smarter clients have made it far easier to set up small advertising agencies. A few ad people, some computers, an open plan workspace and a wacky name are all you need.

Clients have started to work out that although they get wheeled into the flash agency reception areas, past the ex-model or Polynesian part-time actor and into an intimidating boardroom filled to overflowing with friendly, slightly over-eager agency staff, there are in fact only two, maybe three, key people who actually work on their business.

This, combined with the fact that clients are being forced to look at ways to trim costs, means they have become far more open to the idea of entrusting their business to a few ad people with some computers, an open-plan work space and a wacky name.

And so we've seen a plethora of new agencies spring into life, all sharing the same dream - being bought out by a multinational with bucketloads of cash.

Suitors don't come around these parts too often these days. And the trouble is, on the rare occasions they do, it all seems to turn to custard.

I'm using Generator as a recent example. But those of you that still remember 20% mark-ups on production might remember HKM and Rialto.

The Generator boys did it all by the book. Bailed from the mothership and in five short years built up a sexy-looking brand. Trouble is, once they did the deal and sold their souls to the big boys from Oz it all went pear-shaped in relatively quick time.

Clients bailed, partners started packing their bags and before you knew it the Aussies didn't really have a lot to show for their money.

Now the really depressing thing for the ad people watching from the sidelines is it appears the Generator boys didn't do super well out of the deal either because they have all ended up signing their lives away with other multinationals.

Isn't the idea of building up your own agency and selling out that you actually manage to get out? Maybe not. Maybe there isn't that much money to be had. Or, maybe the boys just had unfinished business in adland.

The other tragedy from the point of view of someone trying to emulate the Generator boys was the realisation that the fate of the Generator Bates merger would put off other big agencies with deep pockets.

Buying an agency is a bit like paying a married man to join a swingers club. In this analogy the bloke represents the agency. His wife (the client) isn't so thrilled with the proposition. This isn't the relationship she signed up for. Out of loyalty she goes to a couple of club meetings, but before you can say "let's check out the VIP room", she's off and into the arms of a more suitable companion.

It's happened time and time again. Two agencies 'merge', one culture dominates and the clients aligned with the losing culture head for the hills.

All very depressing when there are so many little shops out there desperately looking for love. That's why Ogilvy and MTC shacking up was so interesting. It's the old story. The big agency with the money, but no credibility creatively, decides to buy some.

And hats off to both sides. I have a lot of respect for Roy and Jeremy. Not just because of their track record but because Roy bears an uncanny resemblance to Robert Plant and Jeremy owned land out on Barrier before it was full of ad wankers.

I don't think this merger will work. The training wheels have already come off and rolled up College Hill and it won't be long before we see the inevitable shrinking of MTC's old client list as one by one her old flames get wooed by younger more nimble souls.

Haven't had an analogy for a few lines so here's another: Imagine if the two cool Rolling Stones (Charlie & Keith) formed a band with a couple of the guys from Radiohead and started kickin' arse. Then Westlife decide to buy this supergroup and merge with it themselves. First the Radiohead guys piss off and then it all turns to custard.

And that's one of the other problems with the majority of today's small agencies. Many of them have been started by ad guys jaded by the big agency scene and keen to go out and do it for themselves. Trouble is, the end game involves being sucked back into the machine and having to work your time out till you can bugger off with the cash.

Surely if you were out shopping for an agency you'd be better off buying keen young things that are just kicking off. But how many youngguns out there know how to build up an agency? And that's why Mr "let's buy it" Partington's most recent purchase seems to make a lot more sense.

I like Metromedia. For a start they don't have a wanky name that would be better suited to a small trendy bar. You never read about their creatives featuring in Australasia's top 5000 clever bastards list. You don't see them employing English creative directors. In fact you don't hear much at all from them.

They just quietly built up a successful business doing lots of really average work and obviously making a lot of money in the process. They've only been going since '99 so they've probably got a fair few miles left on the clock and I reckon Mr Partington and the good ship Ogilvy will get its money back here.