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A 'Different' Kind of Holding Company
By: Dwayne W. Waite Jr.
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Goodbye single indie shops?

The trend in the advertising agency sector does not look good for the startup agency. The environment in which we operate is changing, and barriers are being created that make it nearly impossible for them to land big accounts and survive.

We covered the recent changes big brands are making when it comes to paying agencies. Forcing small shops to put up capital in order to do work first, and then get paid months down the road is ridiculous. Brands are also putting out proposals that demand resources that small indie shops could only hope to have.

We have been kicking and screaming about the changes, because we believe that this shift will kick small guys out of the bigger landscape. Sure, many can survive on small and medium-sized businesses, but many cannot grow without that bigger piece of business.

So the industry is adapting. Holding companies and "strategic partnerships" are becoming the strategy to survive. The latest happenings lead us to Droga5, the agency started by former Publicis Worldwide Creative Director, David Droga. His agency recently announced that William Morris Endeavor (WME) has brought a minority stake in the agency. This will allow Droga5 to tap WME's resources, and expand into dimensions that were once before out of their reach.

Also, smaller shops are getting into the holding company business. We don't know much about this CHR Group, but they claim that they are the "next generation" of agency holding companies. 

New and old shops, the ones that want to grow, can see the writing on the wall. We are about to see the next big wave in agency consolidation. If the first wave is any indication, this is going to be an interesting ride.

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About the Author
Dwayne W. Waite Jr. is partner and principal at JDW: The Charlotte Agency, a marketing and advertising shop in Charlotte, NC. He enjoys consumer behavior, economics, and football.
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