It may have been a long time coming, but the closing of Barton F. Graf has raised questions around the role that independent, creatively driven agencies play in an industry that’s become increasingly reliant on project-based work and freelancers.
The New York agency is planning to close its doors at the end of this year after a nearly 10-year run. Founded by Gerry Graf in 2010, the shop built its reputation on creating humorous, wry work for brands ranging from Emerald Nuts to mobile game Clash of Clans.
But the industry’s general shift to project-based work has taken a toll on Barton F. Graf, which historically relied on agency-of-record relationships with clients including Little Caesars and Supercell, the maker of Clash of Clans. When Supercell made the decision to move towards project work earlier this year, the agency went through a round of layoffs.
“No doubt Barton is closing its doors due to a confluence of changes hitting our industry—from clients moving to a more project-based model to the demand for twice the content at half the cost,” said Sandy Greenberg, co-founder and CEO of full-service creative agency Terri & Sandy. “I can only hope that advertising always has room for hilarious, quirky, original voices like Barton F. Graf that inspire us all to be a little better at our craft.”
In recent years, companies including General Mills, MailChimp and Budweiser have opted to hand more work to agencies on a project basis. Marketers are also increasingly choosing to bring agencies in-house; a survey out of the Association of National Advertisers recently found that 78% of members reported having some form of an internal agency in 2018, compared to 58% in 2013.
These trends come at the expense of the more “traditional” AOR model, which has floundered as clients increasingly seek smaller, more nimble shops to handle their work. Although newer agencies like Joan and Fortnight Collective have managed to capitalize on this project-oriented mindset, others have struggled to adjust and keep up. Despite being consistently lauded for its creativity, it appears as though Barton F. Graf fell into the latter category.
Marla Kaplowitz, CEO and president of the 4A’s, said closures such as this one are the result of a fluid and fast-paced moving industry.
“While it’s unfortunate to see this news, the economics of the agency world are changing at a rapid clip today, as some clients move to project-based work from retainer-led work,” she said. “While there are always casualties in periods of change, new and rising agencies continue to adapt and transform to meet clients’ needs.”
Yet others are wary of what repercussions these changes could bring. Chris Sojka, co-founder and chief creative officer at independent creative agency Madwell, said clients are “leaving value on the table” when they forgo a dedicated agency partner.
“Retainers mean less time negotiating projects, a more consistent team that knows your brand inside and out, proper, joint long-term strategic planning and less juggling of multiple players to get things done,” he said. “The challenge moving forward will be whether the best of both worlds can be had: retainers that allow agencies to staff, plan and build a family and a culture, while delivering on the measurable, specific outcomes that clients expect.”
Barton F. Graf’s closure also raises the question of whether or not independent creative agencies, particularly smaller ones, will be able to grow and thrive in an environment where they’re continually expected to do more with less as margins continue to shrink.
“We are all trying so hard to make this new project model work,” said Katie Keating, co-founder and co-chief creative officer of boutique agency Fancy. “Maintaining a staff and an office and trying to grow and make a profit without any predictability of revenue is a real act of faith. We are all hoping that these ‘dates’ with clients are going to lead to something more, a lasting commitment.”
More established independent agencies, like RPA and Wieden + Kennedy— as well as their holding company counterparts—can fall back on marquee clients when projects fail to come through. But even they are feeling the effects of an industry that’s shifting away from its usual ways of operating.
“As a larger full-service independent, RPA is seeing a big increase in project work, but the majority of our revenue still comes from AOR relationships,” said Pete Imwalle, evp and chief opeating officer at Los Angeles-based RPA, which handles media and creative for Honda.
While he doesn’t see Barton F. Graf’s closure as a “sign that independent agencies, in particular, are struggling,” he said that the increase in project work “requires the ability to grow and shrink like an accordion, or enough size and scale to balance the ups and downs.”
Pitching for project assignments has also proved to be an issue for agencies of all sizes, as it can be difficult to justify spending time and resources on a pitch that may only lead to a small amount of work at the end of the day.
“One real challenge to agencies big and small is the burden of pitching project assignments in the manner established for AOR reviews,” he said. “The amount of effort to win an assignment needs to be adjusted to the size of the potential win. We can’t do three- to six-month, multiround reviews with spec work for assignments that only pay the winning agency a project fee. Margins in advertising are too thin. The math doesn’t work.”