Part 1: Should You Launch a Second Agency Brand?

This came up with a client recently and I have been chewing on it since. They have a business line that does not fit neatly under their existing positioning, and they wanted to know whether to launch it inside the agency or stand it up as its own brand.

It is a good time to be asking, given the last decade or so of fairly brutal consolidation from the holding companies. A lot of agency brands that people in this industry grew up with simply do not exist anymore, and there has been plenty of mourning about the brand value and equity destroyed along the way.

I always find that interesting, because I am not sure anybody outside our industry noticed. The financial press certainly did not run it as a tragedy. It might just be one of those things we care about enormously and nobody else cares about at all (I like to think that's not true, but I can't quite convince myself...).

Anyway. I have actually done this one, so let me start there.

The one we launched

At the agency I ran previously, Alpha Digital, we launched a sister agency called Springboard Digital. It is still going today, so this is not a hypothetical.

The reason was unglamorous. We had decided that below a certain size, servicing a client no longer made sense for us. The spread had got genuinely absurd, with our smallest clients worth something like 1.5% of our largest, which is not a spread you can run one operating model across.

Our first plan was simply to give those clients notice and refer them on to a partner we trusted. Someone who did good work for smaller businesses with smaller budgets.

We could not find one we were happy with. This was a while ago, so please do not come at me if this is you now. But at the time, work at that end of the market was frequently poor, and referring a client on puts your own reputation on the line. If the agency you have recommended drops the ball, that reflects on you.

So we were sitting on a decent chunk of revenue we were about to give away, with nowhere good to send it. Which prompted us to ask - "Is there a business in here that we were not seeing?"

Inside Alpha, no. There was nothing we could do with those clients that worked under our model. But as a separate proposition, yes. A much narrower range of services. Far less customisation. A lower price point. Heavily process driven, and while it was not totally cookie-cutter or copy/paste, it was not miles off it either.

So we built it. It started as a business name operating entirely under Alpha, initially staffed by junior Alpha people with senior oversight, and eventually with its own team hired directly into Springboard.

I don't know the current ownership (I sold out of it after I left Alpha), but I'm pretty sure it's still separate and with different ownership. Back then it was totally separate.

One of the things we were wrong about

One of our original justifications was that Springboard would be a training ground. Juniors would learn there, then graduate up to Alpha.

We never really pursued it, and I think that was the right call. It risked creating two classes of employee, which was neither fair nor accurate, because Springboard did excellent work in its own right and the people there were not junior versions of anybody.

I mention it because it is a reason a lot of owners give themselves for launching a second brand, and it does not hold up.

But launching it as a separate brand was the right call

Looking back, it worked because the differences between the two agencies were genuine.

The service was different. The target market was different. Which meant the positioning was different, and the messaging was different, and the pricing model was different, and the delivery model was different. There was no version of that which sat comfortably under one brand without confusing everybody, including us.

That is the bar. "This feels like a slightly different thing" is well short of it. You're inviting duplication of everything from accounting and compliance to marketing for something slightly different. I'll get deeper into this in Part 2.

Where I stand now

Having done it once, I went into that client conversation I mentioned at the top of the email fairly confident about what I thought. Then I worked with InsightLeaf to revisit a research report called The Shrinking Middle, with actual Australian numbers on how agencies are positioning themselves and which ones are growing, and it made me, uhhhh, reorder my advice.

Not reverse it. The Alpha decision still looks right to me. But the data suggests that most agencies asking "should we launch something separate" could really be struggling with positioning rather than a core structural friction.

I am going to spend the next two emails on this.

Next time, what the research actually found, and the cases where I now think a second brand is a bad idea.

After that, the cases where I think it is the right call, and what the numbers say about how to set it up.