As we prepare to close the decade, with a UK general election that could finally decide Brexit, we are on the cusp of significant change.
The structural forces that have been reshaping the media industry are gathering pace, from streaming to ecommerce. The London agency scene, in particular, is a hotbed of activity, with a flurry of recent M&A deals and start-ups that reflect the changing needs of clients and the changing media-owner landscape.
Jellyfish, Croud and Brainlabs, three digital agencies that have made their name as performance marketing specialists, especially on Google, have all sold stakes in return for investment.
The oldest and the biggest is Jellyfish, which was founded in 2005 and has 1,100 staff after last month’s deal with Fimalac, while Croud and Brainlabs were both launched (by former Googlers) in 2011-12.
With hindsight, that period around 2004-5 looks like a more significant watershed for UK media than, say, the beginning of the current decade. It was back in 2004 that UK print newspaper and magazine advertising peaked at £7bn, before going into structural decline, and the internet went into overdrive as classified ad revenue, in particular, shifted online and Facebook took off.
Jellyfish was one of several digital agencies that launched at that time because they saw how self-serve technology and data-driven marketing were transforming communications and lowering barriers to entry.
Other launches included Essence, which became Google’s media agency and is now a prized WPP asset after selling in 2015, and Oliver, an in-housing specialist, whose parent company, Inside Ideas Group, sold to You & Mr Jones at the start of this year. Both Essence and Inside Ideas Group now employ close to 2,000 people.
These digital pioneers prospered because they were "outliers", Rob Pierre, founder of Jellyfish, says, recalling Malcolm Gladwell’s book, Outliers, which revealed the competitive advantages of being born early in the school year. Pierre thinks it is "not a coincidence" that agencies that spotted the digital opportunity early scaled up successfully. With no "legacy" baggage, they could be flexible and entrepreneurial when it came to building software on top of Google and other tech platforms and developing new skills in consulting, training and in-housing.
Being in London mattered. It has always been a creative capital but the rise of digital media elevated the city’s position globally. It helped that London is WPP’s headquarters and the UK was Google’s biggest market outside the US, according to Simon Nicholls, partner at M&A firm GP Bullhound, which advised Essence, Oliver, Jellyfish and Croud on their deals.
Luke Smith, co-founder of Croud, feels able to compare London with other cities after expanding in New York and Sydney and says: "There are few industries globally that have as much energy as the digital marketing space in London."
Significantly, the founders of Jellyfish, Croud, Brainlabs and Oliver are all staying at the helm because they know further change is coming as TV and out-of-home media become addressable.
This sense that the status quo is not holding also explains why so many executives have been coming out of traditional media network agencies and starting up. The latest launches, The Barber Shop, Walk-In Media and The Press Business, join other recent starters such as Bountiful Cow, Craft Media London and Love Sugar Science, all of which are seeking, in their different ways, to offer a more personal, flexible and strategic service to clients. We will see how many of them ramp up – few of them are at the cutting edge of technology – but this wave of start-ups is a sign of health as we enter a new decade.
This year’s deals involving Jellyfish, Croud, Brainlabs and Oliver do raise an important question about what it means for the future of advertising when such agencies are focused on data-driven messaging and optimisation, rather than creating culture, to quote David Golding, co-founder of Adam & Eve/DDB.
"It’s hard to get excited about 140 characters on a digital screen – until you’re a marketer seeing your sales go up," one performance agency leader concedes.
The past decade has shown digital classified advertising can drive tremendous business growth but it is not enough to build sustainable brands for the long term.
Bringing those capabilities together is media’s challenge for the next decade.