We all like taking on the big guys. Our David versus Goliath tendencies rise to the surface and with luck, the underdog wins. Business and sport are littered with examples of where the outsider has won in a seemingly uneven contest. And today, the concept of the disruptive challenger brand is well and truly established. Witness the rise of the sharing economy as just one example of where innovation has allowed small businesses to scale incredibly rapidly by taking on and beating established market leaders at their own game. Today it seems, the outsider can come through and beat the big guys.
But can this work in the cut throat world of PR and communications? Is there room for a new global challenger to the big ten owned networks? Is there a business model that can stand scrutiny and, more importantly, gain credibility among discerning clients around the world? These are the questions we wrestle with as Hotwire continues to expand globally and as we position ourselves as the global alternative to the mega owned networks.
So what lies behind our strategy and why do we think we are on to something? Well, it all starts with a look at the marketplace.
According to the 2015 The Holmes World PR Report, the big four holding groups account for around 34% of the overall global PR market, reporting $4.7bn in fees. On the surface this appears to be a dominant position but scratch away at the numbers and they tell a different story. The market share of the holding groups is slowing shrinking with the fee income of the independent PR firms outstripping the fees of the big four for the first time. The debate over the owned group versus independent agencies rages on, but it provides fuel to the belief that there is a gap for a different type of global agency.
The conventional choice faced by any PR firm with a growth mindset is acquire or be acquired. Bootstrapping the business in the way firms did in the past is no longer a viable option across multiple markets. It can work in isolated instances, but on a global scale it’s out of the question.
As a firm with a clear vision to be the alternative to the huge owned networks, Hotwire has adopted a hybrid approach to growth. Coming off the back of the acquisition of Eastwick Communications in the US, we continue to build out a global network of exclusive partners and affiliates to provide the geographic footprint required by our 200 or so clients. While strategic acquisitions such as in the US lie at the heart of our strategy, the broader approach is to continue to develop extremely close partnerships with trusted firms in key local markets.
This is not a unique approach as many others have sought to partner to provide global coverage to clients. While there are a large number of networks made up of independent agencies that collaborate under an umbrella brand, the success rate and credibility of such entities is patchy. All too often in conversations with both international prospects and partner agencies, we hear war stories of loose affiliations, overzealous bureaucracy, inconsistent working practices, and more worryingly, a lack of shared values.
In building the Hotwire global network, we’ve very deliberately taken a true partnership approach. Much in the same way as international PR management requires true collaboration and a balance of centralized versus decentralized functions, so the Hotwire network abides by similar ideals.
Our confidence in the partnership route is underpinned by the principles that have guided Hotwire from its launch back in 2000. Shared values, strong culture and a fanatical dedication to transparency and accountability – these are foundations upon which the business has been built. And we’ve taken this philosophy into our partnership approach.
While many independent networks are little more than pins on a map, each exclusive partner and affiliate are long standing friends of the agency. There are many years of shared experiences behind the relationship and, most importantly, a clear set of shared values.
But it has to go deeper – friendships and shared values mean little to clients who rightly demand high standards. So today, investments are being made in ensuring all Hotwire exclusive partners share the working platforms and practices that the owned Hotwire offices employ. It’s about delivering a consistent Hotwire experience regardless of the agency ownership. And each of the three exclusive co-branded partners in the current structure have committed to this principle. What’s more, many of our affiliates – agencies that have yet to take the step toward exclusive status with us – also embrace the same philosophy.
It’s this scaled approach that lies behind our confidence that the partnership route can truly build out an alternative to the owned networks. Small is indeed beautiful and the ability of the agency to provide a truly personalized service through local specialists that are unencumbered by the restrictions of large network ownership; or who are free from regional infighting over profit and loss accounts truly does liberate the potential of global communications.
Over the next three to five years, we will see more PR spend taken by entrepreneurial agencies capable of providing the level of service required by discerning clients. And while the big owned networks will always have a good share of the overall market, the trend will continue toward best of breed and that’s where the opportunity lies. A hybrid partnership model such as our provides the best of all worlds. Local expertise, shared values & cultures, strong processes and a consistent approach. Try finding that from the Big Four.