The battle of big versus small

EDIT: An updated version of this article can be found here

Précis

Particularly in research, but also in other marketing disciplines, big agencies and small agencies will compete for tenders against one another. Normally, one agency is successful. I find this strange as the benefits of several agencies specialising appear, to me at least, to be greater than that of consolidation.

Introduction

Having worked at both a large research agency (GfK NOP, though it was NOP World when I joined) and small agency (Essential Research, where I’m currently employed), I read with interest the “Is Bigger Better?” article in October’s Research magazine (EDIT: The link to “Is Bigger Better?”, which is now online).

The article took the form of a debate, with Paul Edwards (Chairman of TNS-RI) representing “big” and Jan Shury (Joint Managing Director of IFF Research) representing “small”. Their main arguments are summarised below

The Initial debate

Why bigger is better – Paul Edward:

• Doing everything in-house, worldwide, affords a consistent standard
• There are big, validated products that are economical to use
• There is a wealth of diverse talent for more bespoke requirements
• The size of the company means clients are more likely to find a suitable contact with the right frame of mind
• There is a wider range of people with different training, sector experience and tenure
• The resources are available to be proactive in thought leadership, conference attendance and so on
• Investment in IT can be made to fuse different techniques or data sets together
• It is safer than a small agency – efficient, economical, fast, financial secure and properly audited
• “For me, it is about playing the odds”

Why smaller is better – Jan Shury:

• Thinking small makes for a more bespoke and friendly experience
• Who runs the business owns the business – there is no plc board to report to
• There is one building with one culture
• People live the brand by getting more involved and having an entrepreneurial spirit
• Management are involved and can apply their knowledge of running a business
• There is high visibility and high reward
• There is no “One Size Fitz Hall” career progression
• There is no separate sales team – the people pitching are the team that will work on the project
• They are more adaptable to client needs
• “The client views us as the brains of the operation, and the large research companies as the data factories”

My criticisms of the initial debate

Why bigger isn’t always better

• I question the existence of a consistent standard. There may be consistent processes, but a team and an output is only as good as the weakest link. With more people involved, the weaker the link
• The need for many staff (and high staff turnover in general) means that recruitment isn’t as careful or deliberate as a smaller agency
• Do projects really get assigned based on personality? Surely workloads and specialisms are more pragmatic
• Furthermore, the high staff turnover means relationship are lost and working cultures are rarely maintained
• Big companies do offer great training programmes, but there is rarely the opportunity to apply learnings. Graduates get trained up and leave. When I left GfK after 3 years, only 5 of my graduate intake of 20 people remained. Furthermore, we were all promoted at similar rates for “equality”
• Big companies may have more resource to sink into being pro-active, but small companies are also able to do this, if marketing is viewed as an investment. I’ll be speaking at a conference in a few weeks, for instance.
• Big companies may be fast in turning things around, but how agile are they when it comes to experimentation?
• Large agencies have departments to meet all research needs, but are they masters of jacks or these trades?
• “Playing the odds” makes it sound like a science, when I think the interpretation and implementation of research is very much an art

Why smaller isn’t always better

• Small agencies need to pay the bills and so their high morals may be compromised in order to keep the business afloat
• Small agencies have very particular cultures and personalities – it can take buyers a long time to find the company with the right fit
• Personality and quality of work flow from the owner – being able to run a company isn’t analogous to being a good researcher
• There is less inherent experience in specialised requirements, so there can be elements of experimentation and failure on projects
• Workloads for small agencies vary to a greater degree as there is less ability to spread jobs around – this creates uneven working hours for staff and can mean slightly more variable quality for clients
• Staff do take on more responsibility but can also burn out, or seek other employment opportunities with more forgiving schedules (particularly when children enter the picture)
• Credit can often be centred on the owner, who is the company figurehead. I note that there is small note at the bottom of Jan’s article saying that Mark Speed also contributed (though admittedly they are both joint MDs)

Does it have to be a zero sum game?

It had been something I’d already been considering, but Jan’s quote above is very telling: “The client views us as the brains of the operation, and the large research companies as the data factories”.

This quote isn’t necessarily asserting small agencies are better than big agencies; just that they are different. So why cannot both be employed for different aspects of a research project? It is no different to a brand employing both a media agency and a creative agency, or a sommelier not serving bread at the dinner table.

My solution

The set-up

As outlined above, there are advantages and drawbacks to working with both big and small agencies. So, why not try to leverage the benefits of both while minimising the drawbacks.

• Big agencies have scale, security and have the resource to standardise processes. They should focus upon data collection, management and administration, perhaps extending into training of systems or processes. Reliability is prioritised.
• Smaller agencies have more rigid recruitment criteria, generally employing more driven people who get involved in a broad range of tasks. They can use their experiences and immersion to hypothesise on research findings and assist in implementation. Creativity is prioritised.

A big agency is thus employed for data management. A small agency for consultancy.

Evidently, employing two very different agencies to work alongside each other on a project (whether ad-hoc or continuous) is problematic

The challenges

• It has the potential to be an uneven relationship. The small agency is the driver of the project, which effectively makes the larger agency the car. The driver steers and provides direction and control; the car uses its horsepower to get the job done
• The extra investment in finding agencies that meet client requirements and also work well with each other requires a more long-term strategic approach to research (not dissimilar to advertising accounts). In media at least, research budgets tend to be set on an annual basis as a response to strategic objectives (which can differ vastly, year on year)
• The client may need to get more involved in mediating between the two agencies, ensuring a fair division of labour on a project that continues to focus on the end objectives
• Communication becomes more difficult as it becomes more open. A small agency may have previously sub-contracted to a large agency and hidden all the processes (which, let’s face it, clients don’t always care about). Now they are given equal exposure
• The goal of most small agencies is to grow (they don’t seem to believe in Seth Godin’s Dip) – at what point do they become too large to continue to offer the benefits of being a smaller agency
• The model is a bit unkind to larger agencies – it is possible to have a boutique presence within a larger infrastructure. I know QMedia have been pretty successful at this in the past
• The goal is to leverage the benefits of both types of agency, but it is also possible to get the worst of both worlds – inflexible data collection poorly implemented

The way to get it to work

• The big agency would probably be recruited first – there is a smaller number to shortlist, and it is important to get a partner that can be trusted across the gamut of potential methodologies required
• The small agency is harder to recruit due to the many available, and the importance of finding the people with the right skills and culture. Extreme care should be taken in selection
• Before finalising partnerships, chemistry meetings should take place and “rules of engagement” clearly established
• The client needs to be very clear in their priorities in project management (quality, time, cost or scope), logistics of the relationships and the anticipated communication lines. Is it going to be a three-way relationship; will the client act as a central point of contact between both agencies or will the smaller agency interject between the client and larger agency
• Piloting. There will inevitably be teething issues. The first project commissioned using this method shouldn’t be of critical importance with strict time-sensitive outputs

Conclusions

Could this system work? I think it could for companies that operate long-term strategic research programmes that require both consistency of practice and nuanced interpretation. While there are many challenges in getting competitors working together (though, arguably, they are no longer competitors if the industry fragments into consultancy and data management), I see it as potentially being more beneficial to employing a single agency that can effectively perform some, but not all, of the requirements.

sk

Image credit: http://www.flickr.com/photos/hand-nor-glove/2240709916

Advertisement