Blackwood Seven retreats…as media indies surge

Armed with this year’s collective billings, Dominic Mills looks at where it’s gone right – and wrong – for independent media agencies in 2017

It’s been a good year for the media indies: figures placed in my tender hands show collective billings by the indies are up 10 per cent this year, while the7stars (winner) and Goodstuff (honourable mention) triumphed in the Campaign Media AoTY 2017 category – of which more further down this column.

So life is rosy in indie-land. But not for all. While its peers have surged, Blackwood Seven has packed its bags and left town. Indeed, its departure feels like an ignominious retreat, a tail-between-the-legs departure under full cover of darkness.

From what I understand, shocked staff (well, all three of them) were told on Thursday 30th, and by Monday 4th the office was shut. Initial plans did not involve telling the press on the assumption that – in true hygge style matching its Danish roots – this was no big deal. Bad mistake.

Just 14 months earlier Blackwood Seven had arrived in London, peddling all kinds of Scandinavian schizz about how its clever AI product could revolutionise media buying. AI was of the moment (it still is) and Blackwood’s track record was impressive: big clients in the US and Germany, including VW, Amazon and Dollar Shave. What wasn’t to like?

Tons of coverage ensued, with Campaign ramping up the hype by claiming that that the big networks were terrified.

Yeah, right.

My feeling is that it went wrong in two areas: first, as one of the co-founders had earlier suggested, the incestuous nature of the London market makes it hard for outsiders to crack, a view with which I have some some sympathy.

Blackwood Seven co-founder Carl Erik Kjærsgaard

But I suspect the bigger problem was the failure, despite attempts, to buy a local London agency, and which undermined its position from day one. This meant it was reliant on third parties – i.e. rivals – to implement its AI recommendations, which by its very nature was a threat to their existence. So why would they bother to give it house room?

Where Blackwood Seven has succeeded, in the US and Germany, it bought local shops, Two Nil and Booming respectively.

But it may also be that the machine itself was a problem in three areas: one, it under-estimated the complexity of the London market; two, it works by using past performance to predict future, and thus depends on analysing a client’s historical media usage – meaning it’s not much good or too risky when it comes to recommending new channels or for new(ish)-to-media clients; and three, the AI proposition depends for its effectiveness on instant optimisation, but so much quality inventory is already committed in the UK, meaning that market flexibility isn’t always available.

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Others, however, say that it is not quite as bad as that, and the machine is a) capable of absorbing local-market tools and b) very good at the bigger-picture stuff like channel mix and flight patterns.

That theory, as Blackwood tries to reposition itself as a SaaS platform where feet on the ground (repping apart) are less relevant, will be put to the test.

Despite Blackwood’s own failures, I think there is also something about the London market that didn’t help it. Despite its ferocious competitiveness, it is incestuous/clubby (take your pick), doesn’t welcome outsiders, whether organisations or individuals, and arrogant.

It also prides itself on its sophistication, and someone pitching up from a small market like Denmark with a machine they claim can revolutionise media buying will inevitably be treated with suspicion.

Among its peers therefore, there will be few tears shed over its departure.

The media indies: onwards and upwards

It’s no secret that the wheels have come off the holding companies, and the prime cause lies with their now-spluttering media agencies, once the engine of their growth and profitability.

But the indies, certainly in the UK, are flourishing. Here’s a Nielsen table showing their collective performance in the UK up to October versus that of the holding companies. Not bad, eh?

Remember, this is non-digital money spent so far this year, and I am making the rough assumption that digital spend is proportionate (i.e. it adds the same percentage to everyone’s figures). Note also that more recent wins are unlikely to have shown up yet in spend figures.

The indie cohort, by the way, includes the usual suspects – the7stars, Total, John Ayling, MC&C, MNC and the Specialist Works, as well as about 25 others.

I’ve never heard of some in this group – and I take this as a good sign, because it suggests that, outside of the big-name indies, there is a flourishing hinterland – in other words, you don’t have to be a big name to succeed. The cohort also excludes some digital-only or programmatic specialists like Infectious.

Of course, the indies lag some way behind WPP, but collectively they have just overtaken Publicis, and are closing in on Omnicom. Dentsu may bounce back, but IPG and Havas remain a long way behind.

For more evidence, take a look also at the Campaign media new-biz table from last week.

You’d expect it to be led by the networks – and it is, by Mediacom and PHD respectively. But in numerical terms they are matched by the indies, and when the7stars’ Capital One win is added, it will sit in third place.

Broadly speaking thus, the indies are going forward while the networks are standing still or in reverse. To figure it out, you probably don’t need to do more than read the citations for the7stars and Goodstuff in Campaign’s AoTY report.

First, transparency – the sine qua non of the7stars – probably matters more than absolute scale, and it is good to see those that make it a central part of their proposition succeed.

It claims that more than half its 24 wins are from networks, which suggests that the idea has a market currency as a proposition.

I suspect too that the indies’ ability to put senior staff on client business rather than, as with the networks, dealing with endless holding company crap – which will only increase – is a big factor.

You can ally this to staff churn: the7stars says its churn rate is about 15 per cent, about half that of many competitors. As the holding companies try to squeeze yet more juice out of their media networks, so the pressure on staff – more work, less resource, a salary squeeze – will intensify and the churn rate likely increase. You can see where that trend will go…

Here’s an acknowledgement by the recently-arrived Europe boss of IPG Mediabrands, Caroline Foster Kenny – and at long last, by the way, there’s some forward momentum at IPG Mediabrands – of the issues.

Thus the year that began with P&G’s Marc Pritchard’s warning shot over the bows of the network agencies has ended in the UK with them losing ground. I can’t see that changing much soon.