Let’s call it Agency A.
It would be an agency for our new age, for a transformed society which was always on, location agnostic, platform agnostic, sometimes working, sometimes relaxing, using multiple devices everywhere. Mobile first, social media first, video, content, eCommerce, data.
We would focus on content creation and first party data, growing O&O brands and eCommerce. We would be creating a nimble agency, producing great work quickly, with super high standards of execution and providing value for money for our clients.
So what would this look like if we built from scratch? Well, it certainly wouldn’t be from scratch, we’re acquiring and merging other agencies into a super agency.
Digital but experiential
Agency A would be purely digital but we like live comms, we know that experiential works, but in the new normal those experiential communications should be more considered. A live comms arm would come with experienced creatives, 3D renderers, placemaking experts. We are creating results for our clients that we can measure, so everything is measured, everything can be A/B tested and results fed back into the system.
We would want to own and operate our own channels as well as freely using third party channels, reaching our audience wherever they are. So growth of our own D2C brands, content brands and eCommerce stores would be an important addition to the agency model. Some good examples of this business model already operating in the wild would be Vice, Social Chain and Jungle Creations.
First party data
Data would be first party, why? Our clients know their customers best, we know our customers too, we have cleaner data, we aren’t being misled by third party agendas. We go first party data first, but we are using aggregate data whenever possible so we can join the dots across networks, but we store our own data, so eventually everything becomes first party.
The content would be video first, it’s more engaging, it stops people scrolling, we can create two way interactions more easily by capturing the imagination of audiences and creating relationships between our brand ambassadors and the brand’s customers when it’s influencer created the closeness the customer feels to the influencer is irreplaceable.
We would still create lots of written content, the written word is powerful, more portable and is cheaper, more scalable and quicker to create at a predictable quality. Match it with powerful visuals where needed.
Weekly podcasts, daily vodcasts, not only for ourselves but creating for our clients too. We now know that we don’t even need a studio to create passable audio and video, perhaps even there’s a trend for badly produced homemade looking / sounding content, so we’re really giving strategic advice to our clients on how to make homemade videos. Let’s hope we’re out of lockdown mode soon, so we can access those big budgets!
WFH or work from office
This is a post-COVID agency we’re discussing, so we have to mention how we’re physically going to make this agency work, we can have a couple of global locations, actual offices we call home. It makes sense to be in London, New York, Malibu, Amsterdam, Hong Kong and Istanbul, but this time around, we are only talking about where some of our talented staff may live, offices can be virtual, or hotdesking at Soho House in Mumbai or Toronto.
Some of our staff may work from home, certainly all would be welcome to on any given day if that’s where they are most comfortable being creative, or maybe the repairman is visiting that day or you just need to be home to pick up your kids from school once in a while?
Agency A would want its own talent, or influencer agency. There are two models, either the Goat Agency, who don’t own any talent, every campaign they find the right talent for the brand or Social Chain who own their talent and acquire and monetise their channels.
Agency A will be a buy and build project, using a single balance sheet approach. We would need two pillars, content and data, art and science.
How about a bit of both, we buy up influencers into an exclusive agency, acquiring and monetising their channels with them, developing eCommerce brands and businesses. We also work with influencers on an ad hoc basis, working with brand ambassadors or niche influencers who help us to target audiences in an engaging and genuine way.
Our clients can access our talent’s audiences or we can reach new customers in new places when the need arises. The important thing is to adapt for the right occasion and specialise in reading the data, measuring, adjusting and refocusing the campaign.
Experiential is measurable
We create experiential events, this is content also, people often associate events with something other, but it’s 100% content IRL. We can measure footfall, engagement, eye tracking, social media hashtags, location tracking. I love what Complex’s Rich Antoniello has done with the creation of ComplexCon, this is a real tour de force on how a media company can leverage their audience and O&O and create not only an experiential showcase for their own audience but also the brands of their clients.
Of course, there are many great examples in recent history of the media company transforming into an agency hybrid. The creation of the 360° agency of the future, with owned and operated platforms was nearly there when Shane Smith transformed Vice from an edgy fashion mag to where it got to in the mid Twenteens, it feels like it has lost its way under new leadership, maybe looking to purely focus on their content up front and still doing the agency thing to work with brands, but in a more subtle way than that continuous building from the Smith era, where he seemed set on acquiring more and more agencies.
Vice was an expert in mixing content with brand engagement, they owned a pub, they owned an experiential agency, they put out TV content, web, video, merch, yada yada. They perhaps forgot to provide clients with measurement data as much as they could have, but they looked cool while doing everything they did so should be applauded for that.
Building the agency
Agency A will be a buy and build project, using a single balance sheet approach. We would need two pillars, content and data, art and science. We need the creators and the boffins under one roof.
The content business would be video, social content, web, written, photos, podcasts, webchats, etc. The content business would operate like a media company, constantly pumping out content, either for engagement with us or our channels or brand content across socials, their channels or IRL.
The data business would inform the creative in terms of where we place the content, measure its engagement, measure and guide success and failure. The data business would be a programmatic and analytics focused business. It would own and develop systems for measuring engagement online and in the real world.
How to build the agency from scratch
So what would this look like if we built from scratch? Well, it certainly wouldn’t be from scratch, we’re acquiring and merging other agencies into a super agency. Number one and two moves would be acquire a good solid content agency, social first and really great engaging visuals and copy, creatives who thrive working on campaigns and a solid leadership team. Second would be a media planning agency with IP in measurement, with plenty of first party data access, wall to wall techy nerds and data analysts. We would want to offer pure play digital services, PPC and SEO and have the homegrown talent to execute campaigns.
Onto that initial merger you could bolt on your services and talent from other agencies as you go. We need an experiential expert in there, so an agency with some awards under their belts, a social only agency who know how to target Gen Z on whatever the latest platform is, be it Tiktok, Houseparty or Zoom. We’re also looking for some great video talent, so a dedicated visuals agency. Some brand talent, we’d be looking for something really hot like from an East London or Berlin based urban attuned agency, something that has been growing quickly and winning business from larger competitors.
Financing the deals
How would you finance Agency A? You could raise a first round from media and advertising investors, private equity or go to the bank and get some cash. Remember you are offering a company cash and paper, performance related and you would want to put a bit of seller finance in there, so maybe 50% upfront, half cash and paper. Three to five years for rest of the money and shares to vest or earn out. So you don’t need huge amounts of cash upfront. As we go we can afford more companies by leveraging the balance sheet and use as much money from elsewhere as possible, mezzanine finance and investors.
You have to retain control of the holding company, so separate share classes for you and your team, you don’t want to be running a democracy with lots of big personalities always fighting every big decision or steering us all over the place. However, we are advocating a merger mentality, every business you acquire is a merger and the new leaders come in with some skin in the game and money off the table.
Also, you don’t want to be in the trenches with the leaders of each division or agency. Make your merged businesses be accountable for their own bit, let their leaders lead their own teams and then focus on advising and providing resources for your leaders. As the chairman or CEO of the group, your job is to be the face to the business world, position yourself as a thought leader and someone who can rally more investors. The CEO of the group should be the trusted face of the group and be continuously reaching out to other leaders for partnerships or media opportunities.
Opportunity of a generation
This roll up of several smaller agencies into a 360° media agency isn’t easily done, but it’s doable and during this current situation with COVID-19 there are a tonne of good agencies who would be more happy than usual to throw their lot in with a bigger organisation to provide some stability and a safe harbour. They will be available at better value valuations and more open to negotiation for a realistic price than before when the future was looking more rosy. Perhaps a once in a generation opportunity is staring you right in the face?
You need to find the agencies first, it could take ages unless you have built the right team who can get you in front of a number of agencies quickly like we have at Capital A. We can find a number of agencies quickly and get you in conference calls quickly. You then need to make the offers and get the deals done, we negotiate the deals with you and work with some of the best M&A lawyers in the business and our analysts are all ex-major investment bank alumni. Start your search today.