GE Awards Deal to Blur as Clients Skirt Madison Avenue
(Corrects to remove reference to list of most disruptive companies in story published May 4.)
When Gala Coral Group needed help developing a presence on Twitter, Facebook and YouTube, the European gambling company bypassed the ad giants of Madison Avenue and London to a website where agencies bid for work.
“I’ve always felt there must be a better way to invest money instead of going through the agencies,” Chris Edgington, Gala Coral’s marketing chief, said in an interview. “Whether you’re on London’s Charlotte Street or Madison Avenue in New York, you see very expensive agencies with expensive overheads and receptions that you know you are paying for.”
Blur Group’s Creative Services Exchange hosts 10,000 small and medium-sized ad and marketing agencies from mostly the U.K. and U.S. The company said today General Electric Co. (GE)’s healthcare unit commissioned a video campaign for one of its product lines. Other brands that have submitted briefs include television news channel CNN, luxury department-store chain Harvey Nichols Group Ltd. and fashion company Polo Ralph Lauren Corp. (RL), it said. Blur Group says it is adding two brands a day.
The exchange may eventually threaten an industry dominated by agencies such as Ogilvy & Mather Worldwide and Saatchi & Saatchi and known for swanky offices and lavish parties.
Edgington, a former brand manager at Walt Disney Co. (DIS) and McDonald’s Corp. (MCD), estimates the company has spent about 750,000 pounds ($1.24 million) on Blur Group’s platform and saved some 20 percent to 25 percent compared with traditional ad costs.
Following several years of recession, advertisers are increasingly seeking to curb costs and boost transparency. Some of the world’s biggest marketers, including Procter & Gamble Co. (PG) and Coca-Cola Co. (KO), started a practice in recent years where ad agencies are paid based on the results of their work, instead of just billable hours.
“We are flattening out the creative services marketing space and giving it a much more rapid response and making it more cost effective,” Philip Letts, who founded the exchange, said in a phone interview.
The “oligopoly” of the biggest ad agencies probably control as much as 50 percent of the industry, he said. “We thought to provide a platform where small and medium-sized agencies could come together and get lots of the benefits of big agencies.”
Letts said he’s spent the past four years convincing agencies with five people to 500 people to join the platform. To date, the largest brief the exchange has received was valued at $130,000. No briefs under $1,000 are accepted, he said, adding that Blur Group takes a 20 percent commission off every transaction.
Of the big agencies, Letts said that “we know they are watching us and we know their innovation leaders are really interested in what we are doing.”
“There’s new crowd-sourcing happening all over the place,” Sorrell said by phone on April 28. “I think there’s disruption in the industry all the time.”
A spokeswoman for The American Association of Advertising Agencies, the U.S. industry’s national trade group, said she was not aware of Blur Group and declined to comment on the exchange.
‘Things are Changing’
Philip Morley, who has worked for Ogilvy and DDB Worldwide Communications Group Inc., works as a solo consultant on Blur Group’s exchange and has so far created a slogan for Wow Toys in London and helped develop a website for Mullis Partners investment bank in Bangkok.
“As an independent it was hard for me to compete because they’d never heard of me,” Morley said. “Agencies are pretty slow to change in general, but things are changing.”
The industry is changing mainly as consumers move online and the Internet makes business more cost-effective through web technologies, meaning a new entrant can come in and find success, Letts said.
“We want to disrupt the Madison Avenue model,” he said. “A platform like this has been a long time coming.”
To contact the reporter on this story: Kristen Schweizer in London at firstname.lastname@example.org.
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