What you need to know: 

• Howatson+Company, Avenue C and Emotive were each founded on the premise of never selling, flipping the traditional build, scale and cash-out model. Their founders reckon they’ll see out their careers within the agencies they’ve built.
• Critics might argue that's more a case of market economics – few agencies are being actively acquired these days. But they say long-term objectives and sustainable growth don't necessarily align with acquisition-focused margin models.
• And they say that racing for scale tends to kill culture – which is the whole point of building a business outside of more profit-focused global entities.
• CEO of Howatson+ Company, Chris Howatson, says the freedom of independent allows the agency to stay focused on great work without getting “distracted by all the other things that a listed company gets distracted by”.
• Managing partner and director at Avenue C, Hugo Cutrone, says the same thing – he an fellow co-founders started the agency because they want to focus on craft not politics and think media done well requires a more top-heavy, highly experienced team. That comes at the expense of higher margins – but Cutrone says that doesn't matter if the business makes sustainable profit, because nobody is looking to cash-out.
• Simon Joyce, launched creative agency Emotive ten years ago after a decade at MCM, setting up by the beach (and subsequently brining together Ricky Gervais and Optus). “For me, it's a lifestyle as much as a job. We're in this to see people unlock their potential,” he says. With the agency now approaching Joyce's self-imposed headcount cap of 70 people, he's aiming to help staff get to the top of their game faster – and keep them.

Howatson+Company, Avenue C and Emotive all have something in common.

The three independent agencies span from dozens to hundreds of employees, and each go to market in a different way. But according to their founders, they’re all built on the premise of never selling to a holding company – nor one of those new age acquirers. They are, apparently, committed to their independence for the long haul.

It’s an unusual, though not completely outlandish, position. Independent agency founders have long walked the well-trodden path of the hold co acquisition – cut your teeth in the multinationals, go out on your own to create something new, then eventually sell it on to the best bidder.

It could also be a smart and increasingly necessary play – we know the world of agency mergers and acquisitions (M&A) isn’t what it once was. Though holding companies are slowly reentering the ring, agency founders can no longer depend on the promise of well-earned pay day for their efforts. Building something that can go the distance, rather than hunting margin growth in the short term is a sustainable strategy for the new age.

And surprise, surprise, some people genuinely love advertising and media. They want to run their own shop, full stop.

For most, independence means being able to maintain culture – keep people happy, developing and doing interesting work they actually like with people they also actually like. That can put a natural ceiling on scale.

Howatson+Company, led by founder and CEO Chris Howatson, has its sights set on 200 max, while 70 is the “magic number” for Emotive chief Simon Joyce. Avenue C’s Hugo Cutrone and Melissa Mullins ballpark a more modest 30 heads as the max their team of senior experts will reach.

The founders spoke to Mi3 about how they've arrived at those rules of engagement, and why ‘never selling’ is central to their propositions.

Howatson+Company

Helming the youngest agency of the three, Chris Howatson has been forthright about his intentions with Howatson+Company from the get-go – and by now, the origin story of the full-service shop is well known within the industry. (But for the record, Howatson spent nearly two decades and Clemenger, helming CHE Proximity for eight and half of those years before launching his own shop in February 2021.)

For Howatson, like many other indie founders, the decision to branch out from the safety of a holding company come down a longing to be closer to the work, combined with a healthy ambition to do things differently than the holding companies where he cut his teeth.

“I think everyone at some point in their career has to decide if they want to leave the work and go into sort of managerial roles, which takes you more into like business admin,” he tells Mi3. “Managing other people’s compliance rules” wasn’t really for him.

Despite early teething problems – his founder partner Ant White left the business after six months, necessitating a rebrand and a reset – Howatson has been bold about his ambition to create the next great Australian agency, inspired by the legacies of George Patterson, John Clemenger and John Singleton, whose agencies’ (in their various merged iterations) dominated the advertising scene when he started his career in 2002.

“I was very heavily inspired by the era with which I grew up, in that those Australian agencies were locally owned,” says Howatson. “So many people built their lives and careers through them and so many clients created work that defines cultural landscape of Australia.”

Part of that ambition is a two-pronged commitment to firstly, capping headcount at 200 people, and secondly, never selling.

“I've always valued that sort of consistency,” says Howatson. “Howatson+Company for the next 30 years while I'm here - and then whoever takes it on after me - remains as it is, with that focus on clients and less than 200 people.”

Why 200? Howatson reckons that’s the scale at which he can be on a first-name basis with everyone at the agency – and know their strengths.

At just more than three years in, and fresh off its first (and possibly last) acquisition, the agency’s headcount stands at 135.

That leaves plenty of headroom, but the cap means the agency can be picky about who it will work with – both clients and talent – though Howatson is leaving himself wiggle room.

“I think it's a bit like a university assignment, you can go 10 per cent over the word count but you can't go more than that,” he says.

“Once we get to 200 we will still lose stuff so we're still going to have to be active,” Howatson adds, “it doesn't mean we shut the doors and never chat to anyone again”.

Meanwhile, remaining independent, he says, will be key to continuing “doing work that doesn't get distracted by all the other things that are listed company gets distracted by”.

He’s not knocking those who do choose to sell – “it’s a very legitimate strategy for people to build a business” – but with the safety net (and the payout) of a parent company comes a certain level of rigidity.

“A large parent means we have to slow down, we can't recognise people properly, we have to work within governing ratio structures. If I want to send someone to a training course, I can just do that – I don't have to then apply back through an organisational structure, a holding company that manages all those things really tightly. I think the freedom of that is important.”

At 39 years old, Howatson is genuine about his intent to stay at the helm another 30 years before passing on the baton, at which point he envisions implementing some kind of trust that is owned by the talent.

As for what it means for clients, he points to the longevity of relationships as “an important value exchange  – they can know that in one year’s time, three years’ time, 10 years’ time, we will still be the agency that they committed to”.

“If you look at an agency that sells, the people who sell their business will have an earn out period, but then they'll be ready to go to something else. And that's totally fine, but the agency isn't giving their client what [they] signed up for,” says Howatson.

Avenue C

Avenue C managing partner Hugo Cutrone left IPG Mediabrands to launch his independent media agency with brother Daniel Cutrone and former UM alum Will Chapman in 2017.

“We started it because essentially we were in a holding group and we were getting sick of the idea of staying there much longer … we just got sick of the way that agencies were run - not that they're not good businesses, but just the politics, the games, the reliance on junior staff. It wasn't for us, so we decided to set up our own agency that did things differently.”

Cutrone echoes Howatson's point about climbing the ranks and becoming removed from the actual "craft". Hence going out on their own and “setting it up so that we could work the way we want to work, in the industry we love so much.”

Enjoying the work and setting your own rules also enables longevity – hence no plans to sell up. "We’re not setting this up as our big cash cow,” per Cutrone. He claims he left the "sales plan" part of the agency's business plan, i.e. the exit strategy, intentionally blank.

“When we talked to Daniel and Will, we all agreed it wasn't part of the plan. Part of the plan was to have a collective group of people that really love what they did – a group of adults and experienced people and just try and do things differently.”

The vision of the co-founders was to create an agency for senior people who wanted to get back into their craft – everyone at Avenue C has more than 10 years’ experience. That flat structure means consistency for clients – “the people you meet at the start of that pitch process” are normally the ones that work on the business. (When briefing journalists, the stock in trade quip is that the agency "loves kids, we just don't tend to hire them".)

Plus, says Cutrone a flat structure with heavy investment in people and tech doesn’t make for the kinds of margins that draw in acquiring businesses anyway.

“If you're going to set up an agency that has 25 staff, all really senior, invest a lot of your money and profits back into their development and to them – versus the waterfall tier structure – you're essentially choosing to run a business with a different looking profit margin that's not built for sale,” says Cutrone.

The agency’s focus has instead been on sustainable growth, and Melissa Mullins, who joined the firm as a managing partner in 2020, says that the model has been a big draw for recruitment and retention.

“It's almost like they're running this small business within a business because they have so much autonomy to run their client as they want to run it. They're hands on, they're doing all the things that they used to love about their craft. They're making decisions. They're learning from a senior peer group, so they're getting all of that peer-to-peer learning,” says Mullins.

“We have a really amazing culture as a result of that because all of us are working as a collective.”

While Avenue C has no formal headcount ceiling, the model has obvious limits – Cutrone says the “30-person mark is probably it”.

“When you have a team that's so flat, you can't run that many reporting lines and the operating way that we run our business without changing the structure – and we don't want to compromise on that.”

But headcount caps will not necessarily limit billings growth, per Cutrone – and other agencies are starting to recognise that their average staff age is edging closer to 45 than 25 a trend that may be accelerated as generative AI starts to replace more tasks and functions. Chris Howatson’s recently suggested to Mi3 that he thinks that may be the likely outcome for his agency – and Cutrone thinks a flat, more senior structure will stand the business in a good stead.

“I guess our model couldn't be more right than it is in this day and age – because it means that we potentially could grow even larger," says Cutrone. But probably not by much. "I still think we'll always be a medium-sized agency, never be a big one."

Emotive

Unlike the others, Joyce did not come into his own creative agency jaded by the pressures of the holding co structure – his path into the world of indie agencies was unconventional.

Prior to launching Emotive in 2015, Joyce had spent most of his career in the media industry, including 13 years at MCM Entertainment.

That experience, he says, saw him work closely with creative agencies to develop integrated music campaigns, and he came to see a gap in the market for a creative agency that leant fully into culture.

“I felt like there was an opportunity there to have a stronger focus on audience and context of channel, and on delivering entertainment over interruption,” he tells Mi3. “That was that was a driver in in launching this independent – doing things a little bit differently: more audience-centric, more channel-centric, very social-centric at the time.”

It was about finding “new ways for brands to connect” to audiences. “Our north star was ‘how do we maximise the power of emotional engagement to brands customers?’”

Equally, says Joyce, his vision was to create an agency that put people first and embraced the beachside culture of its Coogee home.

“For me, it's a lifestyle as much as a job. We're in this to see people unlock their potential. We're in this, of course, to deliver breakthrough work, to get back to our purpose – deliver ideas that change how people feel. But the driver in terms of where we want to go is based on not having limitless expansion, we want to stay true to this beach-style culture.”

Part of that is a never sell philosophy. “Our vision is to stay independent. I never want to sell it. I never want to be the biggest agency either. I want to be the best at what we do.”

Joyce quips that Howatson stole his strict head cap mantra. Emotive's is 70 for full-timers, which he says keeps things at a “more human” and ‘more sustainable” scale. “You protect the quality of your employees, protect your culture, protect your relationships, and you protect the work.”

It also allows Emotive to run a senior team with “less layers” – meaning those that pitch for a client are usually the same people to work on the business. It’s a point of pride that Joyce attributes the agency’s perfect client retention score in the last two years.

Currently, Emotive’s head count sits at 56, and Joyce is enjoying the ability to be “reasonably selective” about the work the agency will do.

“I love the idea that there's a tension in this business in terms of there's only so many people that can work here and equally there's only so many clients we can take on. I love the idea that at some stage the house is full.”

He’s adamant that the agency still has a growth mindset – just not one that is focused on scale.

Instead, the agency has been able to play around with the kinds of work it does to find its sweet spot, establishing new service areas – most recently PR – under a single P&L. But he doesn't buy into the argument that agencies must now be all things to all clients, i.e. keep adding services in order to compete in a consolidating world.

“The free for all is exactly what we want to avoid," says Joyce. "We can feel confident enough to say ‘hey, this is what we’re good at' and equally, 'no this is not’”.