Arun Sudhaman 21 Nov 2012 // 12:00AM GMT
A decade ago, the Red Consultancy opened for business in New York. The UK agency had established itself as one of the best of a new breed of London PR firms, combining a typically irreverent creative approach with a serious focus on insight and planning.
New York appeared to be the next logical step in Red’s growth, a major consumer PR centre that was dominated, in large part, by the kind of big agencies that Red would gleefully outmanoeuvre on its own turf.
By 2010, Red had pulled the plug on its New York operation. It was not alone. Freud Communications, perhaps the UK’s best-known PR firm, took a similar decision in 2009 after launching in New York to much fanfare.
By then, a view had grown to embrace the efforts of London’s consumer hotshops to conquer the Big Apple. “Madison Avenue,” goes the possibly apocryphal quote, “is littered with the carcasses of failed UK agencies.”
If that was the lesson of Red and Freud’s failed efforts, then it appears that the next generation of UK boutiques are either exceptionally smart or especially foolish. In quick succession, three UK consumer darlings have launched in New York, led by Frank PR, one of the best-performing London agencies of the past decade.
All of these firms profess to benefit from the experiences of their predecessors. Yet, in London’s cut-throat consumer PR market a healthy disregard for the status quo is often a requirement for success, so it is hardly surprising if their concern for history stops there.
“There is a danger of hubris,” admits Diffusion co-founder Daljit Bhurji, whose firm announced its arrival in New York by helpfully noting that PR in the US is “lazy.”
“If the US market has been resting on its laurels and if the British invasion shakes things up, the only people who are going to benefit are going to be the clients,” adds Bhurji. “In any market there are sections which are moribund and it requires something fundamental to happen to shake things up.”
Fighting words, but perhaps Bhurji is on to something. After all, at least three London consumer firms - Exposure, Splendid and Cake - are surviving, if not necessarily thriving, in New York.
“I understand why they are doing it,” says Jon Cunningham, who led Red in New York, and now works for MSLGroup. “It’s a huge market, and one that grabbing a small slice of can be incredibly beneficial.”
Yet Cunningham also notes that what makes agencies successful in the UK “isn’t necessarily what’s going to make them successful in the US, and I’m not sure everyone goes into the market understanding that.”
The Holmes Report has drawn on the experiences of numerous UK agencies to identify why they have failed in New York. The issues below will pose some interesting challenges for London firms, many of whom will need to determine exactly how much they are willing to change if they hope to succeed under the unforgiving glare of the Big Apple’s bright lights.
Lost in translation
Many of the London firms entering New York appear to believe that the two markets are more similar than people think, yet the risk is that they are more different than they realise.
“Irreverent consumer shops are something that doesn’t translate very well,” explains Cunningham.
Cunningham quotes George Bernard Shaw to describe “two countries divided by a common language”. It is a regular refrain where the US and UK are concerned, and one that John Doe founder Rana Reeves thinks is less relevant today.
“Essentially for us, it wasn’t a huge cultural leap,” says Reeves. “What John Doe does is marry brands with popular and contemporary culture. A lot of that culture between the US and UK is shared.”
Cunningham believes that this may be an illusion. “We watch the same TV, films, music, we dress the same, we speak the same language,” he admits. “You think you know it, but after a while something will hit you and, you think - wow - this is a foreign country.”
Another agency executive, who asked not to be named, compares the scenario to the music industry. “It’s the natural thing to think it’s more similar,” says the source. “In a weird way it’s similar to the music business. You look at the scale of the market and say, ‘think of the budgets.’ But you’re going to struggle to break Broadway.”
That is before considering a consumer audience that is much more diverse than the UK, thanks to sizeable Latin and African-American markets.
Diffusion's US management, led by co-founder Ivan Ristic (far left) who has relocated from London
Even if you accept that there are similarities in consumer culture between the two cities, you would be wise to not underestimate the differences in business practice.
The West Coast aside, the US market is often described as being less adventurous than London. “They are innately conservative,” says the agency source. “We buy what we know and we buy the people we know.”
That contrasts with a London PR culture that often sees big clients taking punts on new agencies. MSLGroup North America president Renee Wilson, who spent four years working in London, points out that while breaking convention is “celebrated” in London, that kind of mindset is much harder to find in New York.
“Brand managers might be a bit more conservative in their executions but it's because they know that if they lose even one percent market share, that's like losing market share of a country in Europe,” notes Wilson.
“Folks from the UK need to understand that it's not that US brand managers are less creative, there is just more to potentially lose if they don't get it right. That is also why US brand managers historically have researched more and taken less risks. The UK firms need to find the right way to educate the US clients to do things differently.”
“Ideas tend to be more risk averse since they must cater to a continent not a country,” says Cake COO Adrian Petett, a Brit who leads the firm’s New York operation. “An idea generally becomes more watered down as it has to appeal to a wider variety of journalists, influencers and audiences.”
“The sheer scale of media outlets – regional press for example covering an area the size of Europe – means that the bigger agency players are naturally better set up to handle what is a fairly vanilla offer,” adds Petett. “I think creativity in the UK has moved on apace more quickly than it has in the US because the market is smaller, the media can take stories that we all understand the cultural heritage and shared sense of humour. Or humor.”
Reeves believes these concerns are overblown. “We can operate outside of the rules,” he told the Holmes Report. “Certain things have changed. The craft of PR has evolved.”
“Agencies in your home market can become lazy,” adds Reeves. “When you are new to a market and you don’t know those paradigms, you can break them.”
That might be easier said than done. New York’s consumer PR market is dominated by big networks, but there is also a strong layer of small and midsize players, including the likes of Marina Maher, M Booth, DKC and Lippe Taylor. Firms like these are unlikely to take kindly to the suggestion that they have anything to learn from London’s upstarts.
They also have the clear advantage of understanding the business model that succeeds in New York. In this, there are some fundamental differences with London, from how retainers are billed, to the high staff turnover on account teams.
Underpinning it all is a clear focus on “deliverables”. “How many pieces - what, when, how,” says the agency source. “There’s not much appetite for shaping the market and influence.”
Bhurji thinks that providing an alternative to a “really expensive PR model” will prove to be a unique point of differentiation. “Smaller and medium-sized agencies can hide behind that and say that is why they charge what they do,” he contends. “Also there is a culture that people don’t get out of bed unless you sign a big contract and retainer.”
Instead, Bhurji believes Diffusion can simply offer better service at lower prices. “We got a lot of feedback that the quality of work being produced in the UK was a lot better than the quality of work in the US,” he says. “US firms tend to be twice as expensive as least and the output was about as half as much. I think PR in the UK has evolved beyond that.”
John Doe's US management team of Meena Khera and Adam Thomas flank founder Rana Reeves
Personality not included
On one thing, all parties agree. The success of any London PR firm in New York will depend on the people that it employs.
Indeed, the anonymous agency source goes so far as to suggest that all of the challenges described above can be overcome by hiring the right people.
Frank chairman Graham Goodkind appears to agree. “A lot of UK firms have launched with Brits that have gone over,” he told the Holmes Report earlier this year. “I wanted someone who is an expert in the market on the ground, very well-connected in the New York scene, but also has that Frank joie de vivre."
In Frank’s case, that meant hiring former GolinHarris SVP Jim Dowd. Yet the solution may not be as simple as just putting Americans in charge. The risk, says Cunningham, is ending up as another New York PR firm. “Not something that is reflective of their values or the reasons they’ve been so successful in the UK.”
This is likely to prove the defining challenge for London’s firms in New York. A unique culture, often driven by one strong personality, has proved to be a highly successful formula for agency success in London. Hew too close to that and you may end up being a little too different for New York tastes; mimic American practice, and you could turn into a pale comparison of your all-conquering London outfit.
John Doe, for example, has opted to instal two Brits at the helm, while Diffusion is led by British co-founder Ivan Ristic.
“The ultimate challenge is how do you successfully bring the difference of the UK without becoming a US agency and offering the same product,” says the agency source. “That’s without a tabloid media and knockabout culture, and with a business that’s much more sales-focused.”
Cake Group addressed this challenge by shifting focus. The operation is run by two long-term British Cake executives - Petett and Greg James - but the firm has found success by concentrating on digital and social media, rather than traditional public relations.
“Don’t open a ‘British agency in New York’ – understand that America likes Americans,” cautions Petett. “Bring the best of your British heritage but be sure to open an American agency in America.”