Arkitektive Builds New Agency Model, But You Won't Find It On Madison Avenue

ArkitektiveArkitektive coalition

At a time when advertising seems as if it is becoming consolidated among Madison Avenue's big agency holding companies, a group of free-spirited, entrepreneurial and fiercely independent agencies are banding together to form what may be the industry's first "un-holding company." In fact, that's part of the language the new collective, dubbed Arkitektive, is using to describe what it does, and how it is unlike any organization spawned on, or by Madison Avenue before.

Operating out of the San Francisco offices of Catalyst SF, the fast-growing digital strategy agency launched in 2007 by Carat renegades Cory Treffiletti and John Durham, Arkitektive is more like a loose confederation of complementary and non-competing marketing services agencies than it is a holding company. The logic behind it, Treffiletti told Online Media Daily, is to replicate the same kind of scale and array of marketing services to enable a collective of "best in breed" shops to compete with the biggest companies on Madison Avenue. Symbolically, he said, none of those companies are actually based in New York, though many, including Catalyst, have offices there.

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In addition to Catalyst, Arkitektive's charter agencies include:

* MEA Digital, an analytics-based digital branding shop based in San Diego with offices in New York.
* Hub Strategy, another smallish San Francisco-based digital strategy shop.
* New and Improved Media, an El Segundo, CA-based media services agency.
* WIT Strategy, a Philadelphia-based PR firm specializing in technology and digital media with offices in New York.

Treffiletti said many of the principals of the core group have worked together in the past, but that the confederation would ultimately expand to include other complementary marketing, advertising and media shops that have good chops, but lack the scale to compete with the "big boys."

"We have the chemistry, and the scale to go out and pitch larger pieces of business that we could not have gone after before," he said, adding that the model would benefit both the participating agencies, as well as potential clients, who would have the same ability to mix and match the best collection of marketing services shops, but without the overhead costs baked into big agency holding companies.

"We don't have that top layer of overhead that has to be paid for by a client," said Michael Chaney, another renegade of big Madison Avenue agencies who is now CEO of MEA Digital.

Operationally, Chaney said Arkitektive allows a marketer to pick the services that matter most for their business and brands, and to pay only for them. While Arkitektive will share certain back-office, research and administrative functions for cost efficiency purposes, none of those costs would be paid for by clients, who will be billed only for the direct marketing services the Arkitektive members provide.

Another big advantage of the model, Chaney said, is that all of the principals of the Arkitektive member companies are still 100% vested in their own operations, an incentive most of Madison Avenue's big agency holding companies cannot replicate, thought Canada's MDC Partners, at least utilizes a model that ensures the principals of its agencies retain minority stakes in their businesses.

Treffiletti estimated that the collective begins with an aggregate base of more than $100 million in capitalized billings, which is still relatively tiny compared to the billions billed by Madison Avenue's big holding companies, but he boasted that would change fast, and predicted that Arkitektive would have its first collective new business win by the end of the year.

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