• by James Kirkham , May 6, 2014

Day in and day out, we’re seeing more ad agencies build up their presence in the West Coast, mainly in Silicon Valley. While Silicon Valley is the home to many of technologies’ greatest creations, many are starting to wonder: Is San Francisco the place to be?  

For decades now, ad agencies have enjoyed a lively, respected and successful tenure in Silicon Valley. However, from my vantage point, 2014 may go down in history as the year that ad agencies helped San Francisco discover a new “boom” to hang their hat on: the ad agency / start-up boom.  

Now, agencies – Leo Burnett being one of them – are opting to create a new path for themselves in San Francisco, not Silicon Valley.  

San Francisco v. Silicon Valley  

The capital costs required to found companies and launch products are lower than they were; likewise startups don’t need as many people to make things happen. It is all because, if you think about it, the product created from technology today is so different to how it was thirty years ago. “Silicon Valley” was then about huge factory spaces needing expensive equipment churning away so needing bundles of room.  

Yet the real impact, the very biggest impetus of the last five years has been driven by social, which is such a different space entirely from where we were. And this requires a different space to flourish. We love to note that all the key web and mobile products were seeded initially through volumes of people. So that is Facebook’s infamous genesis on the back of the college campus or Snapchat’s rise to prominence in Californian high school class rooms. The list goes on, and start-ups based around utility naturally sprogged and appeared as solutions to challenges that were set in urban areas. The question of a lack of taxis coupled with the rise of smartphones led us to a product like Uber. The question of San Francisco’s limited hotel selection led to the evolution of a product like Airbnb.  

In short, space requirements of the innovators changed, just as demands for product type shifted. A perfect storm leading to a shift in the center of gravity for the emerging technology platform; San Francisco is the epicenter. 

The New Gold Rush: Ad Agencies and Startups Unite  

What’s happening now is that marketers and agencies alike are recognizing that more than ever, San Francisco is “Madison Avenue’s” newest hotspot. But it’s more than just a place to set up shop. This is crucial. It isn’t just another outpost opening. It isn’t the latest territorial roof of a huge agency. It is intentionally something with a different slant, built with different ambitions.  

It’s becoming a place for agencies — full disclosure, Leo Burnett included — to set up shop with the end goal of finding the next start-up and talent that will revolutionize our clients’ communications ambitions. Simply put, we’re not out there looking for clients; we’re looking for the never-been-done-before start-ups poised to change behavior.  

We recently set up our social and mobile practice in San Francisco with the purpose of discovering, courting and collaborating with these game-changing startups. Especially because social growth on mobile (28%) is much higher than social growth on a desktop (11% as of Q1 2014), it is increasingly important to fuse the two practices. 

So, what we’re saying is that San Francisco isn’t just a place to operate a traditional ad agency. It’s a place for collaboration. Here’s what Leo Burnett has learned about the agency/start-up movement since building its presence in San Francisco:

Agencies need to court start-ups. As we move into a post-traditional advertising era, the current model is never enough. Shifting through traditional channels into social, mobile, through IP ownerships and slice-of-the-pie models, via wearable technology and the “Internet of Things,” it would not make sense for those in the much-admired position of innovation leaders — the agencies — to ignore the clamor of the incredible start-ups, which exist in the hottest area in the world. On the contrary, it is through their innovation, their working models, their pioneering ambitions and their insatiable appetite for great ideas that the best communications can take shape. For an agency to sit beside these nascent technology superstars and together craft innovation with brands is the latest installment of a fascinating creative communications narrative which has been going on for decades. 

Access trumps cash. No amount of money can prevent traditional advertising cycles bowing down to a weakly badged brand or poorly executed tie-up. It is access — access early — that instead will win the day. The aim is to be part of things right at their infancy, when ideas are new and ambitions are huge. We want to discover and help bring attention to the world’s most exciting start-ups and tech companies. We want to show them that brands are of interest to them too, and partnerships can bring incredible opportunities and massive efficiencies. Smart friendships between start-ups, partner brands and with agency expertise thrown in the mix will mean accelerated growth and innovation leads the way.  

Agencies are start-ups’ sounding boards. Agency/start-up relationships don’t always have to result in big ideas. By design, agency culture is one filled with curiosity. We’re always seeking the next big photographer, YouTube celeb, app, designer, writer, etc. We’re developing partnerships with people when they’re new, often raw and almost untried in the commercial space. Just this month, a partnership Leo Burnett brokered with emerging tech platform Cloudcam, a new live streaming video technology that was premiered by Leo Burnett at SXSW as part of a wider content push, #SXLB. We’ve since been developing ideas with Cloudcam and Leo Burnett's Sao Paulo office in time for the forthcoming World Cup.

Leo Burnett fused its social and mobile practice as one in June 2013. It is the only [large-scale] agency to have the social and mobile unit housed under one roof.  At a time where social cannot exist without mobile, and vice versa, we continue to build upon this unique offering. And this year, we’re building it in San Francisco. If an agency wants to compete as a top innovator to advance its clients' brands, there is no question that without an entrenched presence in this area, it would be impossible.