Why agencies are becoming investors
As the agency model evolves, a spate of companies are seeing the advantage of backing new creative startups. They would be wise to look to the example of Mother, which has quietly done this for years to the benefit of all involved
If the traditional ad agency model is outdated, broken even, as some industry commentators claim, then what might a new version look like? New ventures within the ad industry often reflect the need to adapt to both wider industry and client demands, and in recent years we’ve seen a spate of successful agencies backing the launches of startups to cater to a changing set of wants.
Last year saw the launch of Calling, an exciting new agency which has Uncommon (which was itself last year acquired by Havas) as a majority shareholder, while in 2017 Wieden+Kennedy backed Austin-based startup Callen, co-founded by its departing group creative director Craig Allen.
In January this year, independent agency network Mother backed two new startups: Run Deep and Small World. And while you might think of this as a recent trend, they join an investment in new talent that’s been going on at the network for decades. In addition to its offices in London, Shanghai, Berlin, Los Angeles and New York, Mother now has a variety of companies that are part of what it calls the Mother Family: Mother Design, Media by Mother, Broody, The Or, The Romans, Dream Reality Interactive (DRi), and the aforementioned Run Deep and Small World.
“The most important thing for Mother – and its clients – is the ability to broaden our offering with highly skilled and passionate individuals looking at different ways to engage audiences,” says Matt Clark, partner at Mother. “It helps to round out what we can deliver for clients in many different ways, like building teams or skills that can act on the most niche or complex of requirements.”
It makes sense that any startup launched by a bigger agency will usually have a core focus or a specialisation. Mother’s recent ventures bear this out. Both Small World and Run Deep were launched on the same day, yet each offer a unique proposition, Clark explains. “They’re both in the creative communications space but looking at different markets: Run Deep with sports and entertainment, or operations, and Small World with an approach that builds unique, specialist teams for every client brief.
A lot of them were excellent people with an abundance of talent but no money to make their business ideas a reality. What we did back then, and since, has been to help plug that funding gap
“Mother retains a significant minority shareholding, but our investment isn’t passive,” Clark continues. “We provide coaching and support, plus look after much of the back office and logistical support that can often overwhelm a startup. This gives them more headspace to concentrate on what they do best: their actual business. As part of the deal, they also have access to other skills within the Mother Family – from branding and design to PR expertise.”
This approach goes back to the agency’s early days. By 2006, ten years on from its founding, a profile in Campaign cited the agency’s involvement in media strategist Naked, new media studio Poke, design company Saturday and TV production company Monkey. “Expansion outside the core agency by discipline and internationally has been the key factor to Mother’s growth,” wrote Caroline Marshall, and this describes a process which, 18 years later, the agency is still keen to exploit.
“Mother has always wanted to be independent,” says Clark. “But the model in our industry is usually to build an agency, sell it to a network and walk away with the money, leaving behind a weaker business as a legacy, which is not what we wanted to do with Mother. So we looked for other ways to have a different model while protecting Mother and helping other businesses grow. What we do, by investing in smart business ideas and their founders early, allows us to create capital that can be used multiple times over to deliver growth. It is a much more creative approach, and we still retain control over our core assets.”
Clark says that Mother finds the people first – be they individuals or teams. If they have great ideas and the drive to succeed, the agency will support them in trying to make their business a success. For Michael Wall, Mother’s global CEO, it’s the combination of the agency’s independent status, its brand and track record that “allow us to attract and talk to creative-minded entrepreneurs and talent differently”.
And it’s a relationship that works for both parties. “We’re genuinely interested in them and their ambition to effect change in their category and beyond. This shared agenda typically gets the best out of us and them,” says Wall.
The aforementioned Naked offered “real innovation in a creative approach to media strategy”, Clark recalls, while back then the work behind the scenes involved “helping the team behind it build their own business while also having a lot of responsibilities in the real world – families, mortgages and life generally. It was a genuine learning curve, but it gave us a model that we’ve been honing over the last 20+ years in more than 30 partnerships.”
In the early 2000s, there was little precedent for this kind of thinking. “It wasn’t common to make these types of investments if you ran a creative agency,” Clark says. “So there wasn’t really a model to follow. What we saw was that a lot of them were excellent people with an abundance of talent but no money to make their business ideas a reality. What we did back then, and since, has been to help plug that funding gap. Not only has it been proven to be the right business choice, it was also the right thing to do. The co-founders of the businesses we invested in have all gone on to many excellent things since.”
We all offer different but complementary services. We’ve won business both by bringing in and being brought in by other parts of the Mother Family
Small World co-founder Dan Salkey says his agency was inspired by Mother’s own operating model in its curation of “unique crack teams for individual client briefs drawn from a roster of world-beating traditional and non-traditional creative talent”.
Salkey adds that being part of the Mother Family works as an instant value-add for clients in new business meetings. “These clients often come to us for one thing but usually have the scope to tap into other services,” he says, “whether that be Mother, Run Deep, Broody, Mother Design, The Or or The Romans. We all offer different but complementary services. We’ve won business both by bringing in and being brought in by other parts of the Mother Family.” The resulting projects can often become cross-collaborative. Salkey cites one ongoing collaboration with Mother Studios – “a phenomenal piece of work that would otherwise be unachievable scope-wise”.
The Or is another creative shop launched with Mother’s help in 2020. Founded in the middle of the pandemic, the outfit was formed as a way of tapping into “a new style of independent creativity”, says ECD and creative partner Charlene Chandrasekaran, and originally set up “as a boutique home for newer scale-up brands such as Bloom & Wild, Harry’s and Gorillas”.
“These brands were seeking high-calibre creativity,” she says, “but with heavily nuanced ways of working – a model of servicing that we’ve stuck to as we’ve evolved and built around household names like Netflix, Taco Bell UK and YouTube.” Chandrasekaran says that The Or now runs a team of 20 but has the unique ability to access hundreds of specialisms within the Mother Family. “We tap into the network to offer clients a ‘made-to-order’ approach,” she explains.
Run Deep co-founder Jodie Fullagar also sees many benefits to the relationship with Mother, not least the fact that most of the businesses are based at the agency’s London HQ. “Being in the building allows us to build scale quickly when we need to. We’re able to work with different parts of the Family to tackle briefs we wouldn’t usually be able to pursue at this stage in the lifecycle of an agency. Aside from that, it’s great to be around many talented and inspirational people every day.”
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When BBH set up its Zag initiative in 2006 to develop products and services for the agency (it now also invests in startups), it reflected an ongoing desire for product creation by agencies which had been going on unofficially for years, occasionally to long-term success beyond the initial press/publicity fanfare (see Coudal Partners’ Field Notes notebooks, Anomaly’s EOS lip balms, or Cinder, The Barbarian Group’s open-source software platform, which started life as the agency’s in-house creative coding framework).
In 2017, Mother invested in Broody, a unique company that partners with entrepreneurs who have “great ideas” with the intention of turning them into successful businesses, “using creativity and commercial acumen to launch and scale”, says Andy Medd, co-founder of the business with Pippa Dunn. “Broody is very unusual in the investor space, as we partner with businesses and don’t just invest money,” he explains. Broody essentially becomes part of the team, Medd says, and “because of this model, we’re completely aligned with our business partners, which makes working together less conflict-prone”.
Broody’s experience and expertise in business fundamentals complements the entrepreneurial drive, Medd explains, and helps the founders concentrate and craft their idea to develop a launch plan. The company identifies the areas where it can add value (and those that are best left to the existing team), while examining the product and the proposition to ensure there is a market fit.
They then craft a business plan together which includes pricing and route to market, before moving into branding, where they work closely with Mother Design, marketing and operations (manufacturing, auditing sustainability credentials and scalability of current operations). “Once we’re up and running, we take a constant refinement and growth approach to hone all the elements of the business over time, aiming for efficiency and effectiveness.”
A pattern emerging here is that Mother also benefits from the relationship. “Yes, it works both ways, as we have deep expertise in helping direct-to-consumer businesses reach customers and scale quickly,” says Dunn. “Lots of legacy brands are moving into this space, so what we’ve learned over the years is invaluable to help shortcut to success. Brands are looking for different types of routes to markets, and we’re able to offer something most agencies can’t.”
With the help of their supportive Family, it looks as if the Mother brood might be an example of how a modern agency network can provide exactly what the 21st-century agency – and client – wants.
