Startups, Agencies (Try to) Build Relations

Frustrations abound, partnerships not so much

Would an advertising agency ever create the next Foursquare or Tumblr, asked James Cooper, chief creative innovation officer of JWT New York, during a panel yesterday on pitching startups to agencies and clients. Cooper answered his own question definitively. No.

“An agency isn’t set up in that way,” he said. “We can do internal products fine…but that’s very different from creating an actual startup, a business that’s going to go out and make money. I just don’t think any agency is set up for that.”

Instead agencies are better suited to work with startups. Well, they’re supposed to be. Last year JWT signed a deal with David Tisch, who runs the New York arm of startup incubator TechStars, to connect startups under Tisch’s purview with JWT and its clients. Tisch said that since signing the deal with JWT, TechStars has connected 10 startups with agencies, and at least 10 other agencies have approached him.

But just because a startup, an agency and a client can get in a room together doesn’t mean everyone’s going to leave the room satisfied. John Laramie, founder and CEO of out-of-home buying platform ADstruc, said that it’s usually a six-to-eight-month process from initial introductions to a tangible work relationship. Problem is, the process often dies in its crib.

Just about everyone can share in the blame to varying degrees. Startups have to navigate an agency’s or brand’s organizational structure to determine who can get them in the door and then to the top floor. Brands have to manage being on the cusp of innovation while mitigating the risk inherent to experimentation with unproven platforms. And agencies have to play matchmaker, pressured to get the right teams in the room together. When that doesn’t work out, the startups leave feeling like a shiny new toy for the agencies to show off—then discard.

“It comes off as agencies [bringing in startups] to claim credibility [saying], ‘Look, we tried. We put some cool shit in front of you; you guys didn’t buy it. It’s not our fault,’” said Tisch.

During the panel Tisch questioned the extent to which the JWT deal is a “dog-and-pony show” for JWT, to which Cooper replied that it was a 70-30 split in favor of the show. He said, “We work with very big clients—Johnson & Johnson, Diageo and stuff like that—they are not traditionally these kind of nimble, lithe people who are like, 'You know what, we’ll hack off like a hundred grand of our budget to do an experiment.'”

That can be especially frustrating for startups whose businesses can skyrocket by partnering with brands. Tisch said the moment when Foursquare took off was its partnership with cable network Bravo in 2010. “Bravo TV made no sense for them, yet Bravo had an audience, a national television audience, that Foursquare was now integrated into that pushed people to their product,” he said.

But Cooper suggested that it shouldn’t be too jarring an experience for fledgling companies seeking essentially a high-profile patron. His approach is to start 10 fires with the understanding that nine will likely extinguish. “I think that’s a little bit similar to how investors treat startups,” Cooper said.

But often startups can’t tolerate being toyed with, said Tisch; they’re trying to build a business. “A startup has to make a decision,” he said. “Do we put our money toward another hire? Do we put our money toward building a feature set that might be able to speak to brands?”

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