For a creative services firm – like ad, PR or marketing agencies – differentiation is key. One way agencies distinguish themselves is by touting their independent status. In the advertising world, that may mean the company isn’t part of a consulting firm. The implication is that its team is free to offer top creative and client-centered work.
For PR firms, independence can mean different things. Calling an agency “independent” is sometimes a polite way of saying “cheap.” The theory is, its rates are lower because it doesn’t answer to a holding company or private equity firm that demands high margins. And it sometimes applies. Size and overhead matter, of course, but there are other factors, including how an agency sets its fees, how it bills, and how efficiently the team produces good work.
An independent PR agency may have a lower overhead than a mega-firm, but many are substantial in size and depth. A focus on size missed the point. In my view, independence is cultural. It signals an openness to fresh approaches and a resilient attitude about rejection and failure. Most importantly, it’s about an entrepreneurial way of approaching the work.
What’s more, it translates into real and tangible benefits for clients. Here are the most important ones in my view.
Recruiting and retaining talent is more relevant than ever since the pandemic sparked The Great Transition among many workers with the flexibility to work from anywhere. Of course, large agencies have real advantages when it comes to hiring – fat salaries and big-name accounts, to name a couple. Yet in an independent environment, the absence of complex hierarchy is a real advantage. It not only leads to speed of execution for clients, but it promotes staff mobility. When there are fewer layers within the corporate structure, it’s easier to move up. Then, too, independent agencies often have more flexibility to reward staff outside of rigid salary parameters.
An owner-operated agency is in a position to create that entrepreneurial environment that rewards initiative and accountability. That goes hand-in-hand with risk tolerance. A risk-averse team will be afraid of big ideas or contrarian strategies. A punitive or bureaucratic culture will reward a herd mentality that hews to the safety of what has worked in the past. At worst, it frustrates star performers and creative types who will inevitably look elsewhere for their psychological career rewards. An independent environment, by contrast, promotes top performance and independent thinking.
I’m surprised more clients don’t ask about individual profit centers within one agency. In my experience, the siloed approach where each practice area has its own P&L is more typical among large, bureaucratic firms that don’t operate independently. The walls between practice areas mean there’s a disincentive to bring in staff from other groups even when needed. What’s the point of international offices or new services if they’re discouraged from spending time on client business due to internal competition or fiscal pressure? A single profit center, on the other hand, rewards the best work for the client, regardless of where it originates.
An entrepreneurial agency culture incentivizes initiative, growth, and quick execution. Most clients appreciate this, but its value really depends on whether there is cultural compatibility in the relationship. For an agency like ours, which works with high-growth technology companies, it’s essential. For a larger, bureaucratic organization, a slower cadence and an agency team with multiple levels and layers might actually be a better fit.
A more entrepreneurial environment also rewards independent thinking and big ideas. A common challenge of an “integrated” team is that the highest-margin service tends to lead. That means risky ideas are discouraged. This is not ideal because PR is more tactical than message-driven paid media, and mediaworthy ideas and events really count.
Objective advice is not always easy or organic in a politicized corporate environment. A recommendation that shifts budget from one column to another is subject to multiple approvals and challenges. But unfiltered and objective feedback is, above all, what clients need from their PR and corporate communications teams. It shouldn’t be diluted by internal politics or infighting.
Okay, I’m trying to have it both ways here. I hate to equate independence with small fees or puny clients, because big-brand campaigns can come out of midsize independent PR firms. But the overhead that goes with integrated services and global offerings, coupled with the demands of holding-company margins, can undermine client service. It also inflates costs. It’s the most common complaint we hear from clients who switch from what I like to call intergalactic agencies.
I started my career at a midsize owner-operated agency. Then I followed the siren song of the largest independent PR firm, joining it for five years, followed by a stint at an integrated ad agency. I started my own firm in the model of the first one. Each structure had its merits. There’s no one model for a creative services or PR advisory business. But I’m biased in favor of less bureaucracy, greater simplicity, maximum flexibility, and fewer deciders. At a PR agency, independence is not about size or business model, but about culture, initiative, and talent.