Typically speaking, agency founders strive for the big payday that comes with a major holding company acquisition. But this year saw two shops aim to do the exact opposite, namely regain their independence by ending decades-long relationships with Interpublic Group.
Dailey Advertising, which IPG had owned for more than 30 years, completed a buyback last February after the holding group approached the agency with an offer following a series of strategic discussions.
“[It was] a mutual decision, done in a thoughtful way,” said managing partner Jean Grabow, adding that Dailey “wanted to nurture the culture we already have as a strong branding agency.”
The Los Angeles-based agency formed a new leadership structure around Grabow and fellow managing partners Michelle Wong, Steve Mitchell, Brad Johnson and Bill Waldner, with former CEO Tom Lehr opting not to participate. Dailey also brought back executive creative director Marcus Wesson, which Waldner says allowed the team to “let our new creative energy shine.”
“We had kind of an odd model, because we were an independent firm within McCann Worldgroup,” TM Advertising owner and CEO Becca Weigman explained. “From an organizational perspective it was the right timing because of McCann’s desire to have McCann offices and TM’s desire to be independent. There was no animosity … just two different organizations wanting two different things.”
A client-side shift away from agency of record relationships helped make independence more feasible for both shops.
Navigating the industry without the benefits of a holding company’s infrastructure brings new challenges, but Grabow said it has also opened new business opportunities—particularly regarding project-based work. Dailey, for example, recently picked up work for mobile marketplace Bountye as well as an assignment to promote the 2018 Winter Olympics for NBCUniversal.
“The flexibility we now have to access new capabilities and pitch business is paying off,” Grabow said. “We’re continuing to pursue new business opportunities, and offering new services to existing clients.”
Weigman said that “business is prospering” for TM as well, with the agency retaining all of its old clients and winning AOR duties for Taco Bueno in July. Its newfound status as a minority-owned company also plays a role in new business pitches.
“From a market and business perspective, there seems to be a higher level of importance put on minority-owned companies,” she said. “Being minority-owned, we can go in through the procurement angle and get project work. We historically were not a project basis type of agency—we were always AOR. Now we can do both.”
As traditional models outlive their sell-by dates, the path to long-term success for smaller agencies no longer runs exclusively through one of the Big Five holding groups. On an April earnings call, CEO Michael Roth explained IPG would divest from “small agencies that, frankly … were either losing money or … were not relevant to the offerings of the entity in which they were residing, in geographic regions that were not efficient for us.” As a result, a third shop left IPG’s orbit last month when the holding group chose to divest from HackerAgency Seattle after 18 years, and Weigman expects more holding companies and agencies will reevaluate their relationships in the future.
“Something strange happens when you become completely independent. There’s a real entrepreneurial spirit among employees,” Weigman said. “I think you’re going to see it on both sides [with] holding companies looking at their portfolio to see who makes sense” and agencies figuring out where they fit in.
Dailey and TM have already decided that complete independence, with its attendant challenges and promises, is the best way forward.