Why Do So Many Big-Name Agencies Struggle in New York City?

By Patrick Coffee Comment

This week, The Martin Agency told employees that it would soon be closing its New York office.

“Yesterday we announced to employees that, as part of a strategic decision to focus on growth in Richmond and London, we are reducing our presence in NYC,” a spokesperson told Adweek. It’s not clear how many employees will be laid off and how many will relocate to IPG’s corporate space in the city.

That makes Martin the latest in a series of top shops to shutter their Manhattan operations in recent years, most prominently Leo Burnett and Goodby, Silverstein & Partners (both in 2015). Fashion-focused agency Lipman also closed in 2013 due to what sources called problems with its parent company, and the subsequent Page Six item about “a mysterious man with a 2-by-4” who alleged attacked David Lipman the day after his shop filed for bankruptcy is an agency horror story for the ages.

Even more recently, McKinney’s New York team announced plans to move into the Barbarian Group offices.

Like McKinney, LB and GS&P, Martin’s NYC location started as a satellite unit, and it lasted more than a decade. But the IPG-owned network also made several high-profile moves in an effort to shore up its Manhattan investment over the past two years, hiring top executives and expanding its creative team around the time it won the Kayak creative review.

Its most prominent work for that client poked fun at the old, reliable man bun.

The reason for the move is one unnamed company’s decision not to renew its contract with Martin. Given that Kayak and Italian pasta/sauce company Giovanni Rana were the Manhattan location’s biggest clients, the possibilities are very limited. We’ve reached out to both companies and will update this story if we hear back.

Our headlining question remains, though: why do so many agencies without major offices in New York struggle to maintain a presence here?

Some reasons we’ve heard cited are the (obvious) overhead costs and the distance—both geographic and cultural—between New York and cities like Chicago, San Francisco or Martin’s hometown of Richmond, Virginia. There’s also a good bit more competition in terms of creative reviews, especially from agencies that are very well-established in the New York area.

Then, of course, there’s the general trend in which clients hesitate to maintain long-term relationships with their agencies of record…if they even name AORs in the first place.

But we hear that if you can make it here, you can also make it in any number of other, unspecified places.

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