Adam & Eve opened its doors for business in January 2008. In the agency's first year, it won both the entire John Lewis and Halifax business, securing contracts that guaranteed a level of retained fee income that enabled the founders to make senior hires, commit to bigger office space and invest in capability.
Little over four years later, its four founders sold the agency to the Omnicom network, DDB, for a reported £60m. During its brief time as an independent, the agency had generated revenues of £8m, reported billings of close to £80m, and was named Campaign's Agency of the Year.
Adam & Eve were following in the footsteps of the likes of Bartle Bogle Hegarty, Rainey Kelly Campbell Roalfe, Clemmow Hornby Inge, and many other agencies stretching back as far as Saatchi & Saatchi in 1970. All are great examples of London startups that rapidly established themselves as world class players.
Despite signs that the UK's economy is improving, and with the government, the IPA, and city analysts forecasting an uplift, and the WPP Group reporting better than expected results for the second half of 2013, the market environment should be less challenging for startups in the UK. But it is not. Why?
Firstly, the overall agency business model is becoming more project-driven. It is becoming increasingly difficult to get commitment to long-term retainers unless you're a network player delivering multi-channel communication for a client across several markets. Clients know they can throw a startup a bone in the form of a one-off project and they don't need to make the kind of commitment from the outset that John Lewis and Halifax did with Adam & Eve. This makes it much harder for startups to commit to the investment in talent, space and capability; they are much more exposed because of the lack of visibility when it comes to their revenue stream.
Client expectations are much greater in terms of agency capability than when Adam & Eve launched in 2008. Today's startups that get to pitch for the kind of client business that brings immediate success will probably need to show how they're going to deliver customer relationship management, social media, shopper marketing and so forth, as well as traditional brand strategy and advertising. In a world of agency consolidation, it will become increasingly difficult for startups to demonstrate this capability, even if they're prepared to make the upfront investment required to be credible and competitive.
Lastly, with startups not landing the big client or brand at the outset, it becomes more difficult for them to showcase their creative firepower and quickly establish their creative credentials. The implication of the communications business becoming more project-driven, and the challenges in securing a big client from the outset, means that even if a startup has a transformational leadership team, it is difficult for them to secure the platform that enables them to establish their creative credentials and get momentum behind new business and client acquisition. Historically, from Bartle Bogle Hegarty to Adam & Eve, early momentum has been the hallmark of a successful startup and it is incredibly difficult for a startup nowadays to get that kind of impetus.
So should this deter the most talented, entrepreneurial leaders from starting their own agencies? I think not. Most of the really successful startups have been driven by the founders' compelling vision of an agency that offers something better or different. The Corner London and Joint London are just two such examples of recent startups. They have won business and they are getting traction in the market. But their road will be longer than Adam & Eve's, and they're unlikely to get rich quick.
Gary Stolkin is global chairman & CEO of The Talent Business.
The Guardian's Changing Media Summit takes place on 18 and 19 March 2014 – click here to find out more.
