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

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Image conscious

nike or adidas?

Photo by http://www.flickr.com/photos/tibult/

I’ve had the same haircut for about 8 years. Some of my clothes are nearly as old. While I don’t stand out like a sore thumb, one could say that I am quite distinctive. Hence I was not surprised when I was spotted from distance in a club last week by someone I had not seen for over a year.

That got me thinking. How distinctive are research companies? If I saw a research paper or presentation, could I accurately guess who conducted it? The answer, in 95% of cases, would be no. While a few methodologies – Link or Worldpanel for instance – are immediately identifiable, the vast majority could have been carried out by Generic Research Company.

Obviously the client’s aims and objectives are going to factor into how research is presented. But it is my belief that the industry has an image problem. Some small agencies/boutiques/consultancies that specialise in a particular field or discipline excepted, agencies tend to look the same to me. It is my experience that agencies try and swallow up as much business as possible. By trying to be everything, they don’t become anything.

This needs to be changed. To my mind, there is little difference between competitor agencies. Only a few companies can be invited to tender each time. I find that companies tend to get selected from personal experience or recommendation. Company image or perceived expertise rarely seem to factor.

From my experiences when I worked agency-side, I have encountered several explanations for a lack of brand differentiation or product innovation. These have been both explicit and implicit. The one thing that unites them is that they are myths. Below are six examples that I have experienced.

Business to business organisations operate under the radar

Research agencies may not get the same level of exposure as consumer brands, but marketing departments still have the trade press, press releases and the company website with which to reach potential clients. Company blogs can also be a great way to define an identity, but few companies seem willing to devote the necessary resources.

Clients only want an affirmative answer to their hypothesis

There are many routes to an answer. And if a client is that inflexible, is the business margin on that job worth it, or can resources be better utilised elsewhere?

Clients only care about price

There is a vicious cycle where innovation in research design is omitted because of the cost – monetary cost, the cost of trial by error, the opportunity cost of resources. Cost is obviously a factor in competitive tenders, but it only becomes so important when there is so little to tell between pitches. When there is no innovation. We rarely go for the cheapest option; we choose the agencies with the best ideas (within our budget, obviously)

Clients don’t want to experiment in case something goes wrong

Some clients are like this – not all. But few can resist the PR from a paper resulting from a successful innovation. Personally, I would like to see more papers detailing the tribulations of experimenting in the unknown, but understandably few will be willing to divulge such information.

Pitches are won and lost by the people, not the agency

Pitches are very much an idiosyncratic endeavour – the team in place will have certain skills and experiences, and this will naturally influence the response. However, no person is bigger than the organisation and individual preference should be no obstacle to instilling an overarching philosophy.

The industry is too preoccupied by consolidation

Surely this is the perfect time to forge an identity. It will be occurring inwardly – why can’t it be extended externally?

These are by no means representative views of the industry, but they are views that I have personally encountered. The theme for the forthcoming MRS conference is “Changing business through better customer understanding”. It is my hope that part of the debate will include branding and distinctiveness, and that this can provoke agencies into action.

sk