Should Agencies Be Their Own Clients?

Why shouldn't agencies be their own clients -- develop and market their own brands?

Increasingly, ad agencies are considering going into business for themselves: creating a brand, producing the product, and selling the item.

As Ben Maldon, managing partner BBH Labs, told Danielle Sacks at Fast Company, "By creating our own brands, we wanted to make ourselves recession-proof -- or at least more recession-proof than other agencies."

A look at what a few are calling "New Idea Agencies," the article, "More Creative Shops Are Commercializing Their Own Product Lines: With major advertisers cutting costs, creative shops are increasingly commercializing their own product ideas," provides some interesting insight as to why agencies should be their own clients. The article also provides a couple of reasons clients might want to work with "New Idea Agencies."

Here are two good reasons to be your own client:

• You become commercially aware. According Carl Johnson, cofounder, Anomaly, "When I started a million years ago, I almost didn't know money had anything to do with the advertising business. You had a meeting, took a brief, made some work. It seemed enormously detached from selling something to people."
• "You get exposure to the full gory detail of how clients make and lose money," Malbon said.

Here are a couple of reasons why being your own client may not be good or easy:

• It's is a big distraction to ongoing client work.
• Clients may wonder: are they working for me to putting their best efforts into their product?
  
• You may get specialized insight into the category, yet it also prevents you from taking on from competitors in the same category.
• Your partners in the development and manufacturing of your product may represent a conflict with a future prospective client.
  
• Since you're potentially investing not only your own time but also your own money into a product, you could wind up losing both.
• If your brand fails, your people may lose equity they shouldn't have counted on, but did anyway. That's a double loss.
  
• If you need to run your own business to understand the pressures your clients feel, you may need to change how you operate.

By the way, one of the more amusing points made in the article is that one of the advertising executives said they did not spend a dime on advertising:

JOHNSON: One of the most amusing things is, of course, we haven't bought a single ad in support of any of our brands. Not one.

VITRANO: That is incredible.

JOHNSON: Why would we? You can do so much if you know what you're doing with product placement, sponsorship, digital PR. It's that whole "I haven't got any money, so I'll have to think." It makes you much better at grinding out media without paying.

Well, when it comes to spending their own money, advertisers said they did not buy ads, but relied on several marketing disciplines, including digital PR. Very interesting endorsement.