How clients are dictating agencies’ return to in-person work
The article was first reported on, and published by, WorkLife sibling Digiday
As the working world continues to redefine work culture, client relationships are often influencing the way agencies and media firms make real estate decisions.
The one-size-fits-all approach no longer seems to apply to the future of hybrid work. Agencies are forging ahead with the transition back to office with some expanding overseas; others are scaling back on some locations and sites based on how client and partner interactions have evolved.
These changes have largely been driven by clients that no longer expect to meet in-person.
That new reality partly drove executives at independent agency Boathouse to rethink how and where they set up shop. A new expansion on the West Coast is focused on the health care and technology sectors. And while the company is located in Boston and Washington, D.C., it also recently opened in a shared space in Menlo Park in the Bay Area, where many executives lived before companies dispersed throughout the country.
“Clients are definitely more flexible about physical presence,” said Boathouse president Peter Prodromou, who joined in August. “What we learned in the pandemic is that productivity can be very high, even in remote locations. So we look at real estate through that lens — realistic space required for collaboration and the economic and creative flexibility now inherent to a post-pandemic reality.”
Patritia Pahladsingh, managing director at media and creative firm TBWA/NEBOKO, a media and creative firm, has also acknowledged this new working reality by offering “more social spaces” that “are not necessarily related to work,” said Patritia Pahladsingh, managing director there. Increasingly, open-plan spaces may include more call booths or social and meeting spaces designed for both gatherings and remote conversations.
“After two years of COVID, it is also important to connect with each other again, and that is better and easier if we have these kinds of places in the office,” Pahladsingh said.
TBWA’s clients prefer virtual meetings, so the in-person office space is prioritized for in-person meetings for briefings, brainstorms or client presentations.
“But in the end, they also prefer that we see each other. After all, we sell creative ideas, and ideas are energy. You can convey that much better when you are together in the same room,” Pahladsingh said.
Some agencies have invested in new technology to sweeten the deal. At Hylink Digital Solutions, that has meant large monitors and video conferencing software, said Humphrey Ho, U.S. managing partner at global ad agency Hylink Digital Solutions.
“We’re now going to build and buy the best technology at the office… pods to work at the office, up-down desks that we already have, good coffee, comfortable chairs, comfortable lounge areas, and common gathering spaces — to entice people to want to come to the office versus make people come to the office,” Ho said.
Hylink is headquartered in Beijing, with various offices including South Korea and the U.K. For the past three years, the company moved into a smaller temporary office, which cut down significantly on rent, though Ho did not say by exactly how much. Although clients have not expected them to have physical offices nearby, employees have started to come back at pre-pandemic levels.
“That’s allowed us to get out of the great resignation and wage inflation and everything, because we saved on what is the third most expensive line item of any advertising agency — which is rent,” Ho told Digiday.
Client preferences also vary depending on the market, Ho added: “In Los Angeles, client expectations of having physical places to service is still an expectation. However, in New York, interestingly, they just want New Yorkers even though they live in Florida or Philly… Clients in Europe continue to request us to have offices co-located in countries close to them, if not nearby.”
As far as the real estate budget is concerned, different agencies are taking a varied approach as they scale up or move into temporary and shared spaces. Boathouse’s office budget will “likely be smaller,” but Prodromou did not specify by how much.
Tug, an independent global agency, is expanding to the U.S. with a new office in New York City this year. It has an international footprint with offices already in London, Berlin, Singapore, Toronto and Sydney serving international clients including Trivago, IKEA and Intuit.
“We’ve really looked at the market, and the idea is that we’re going to come to the U.S. with the proposition that we can help [brands] go international,” Beck said.
For Tug, future spaces and changes will ultimately differ from market to market, but Beck finds comfort in not being locked into a lease and the agency plans to occupy WeWork spaces until a hub reaches 10 employees before securing a permanent office.
David Jordan, president at Milwaukee and Chicago-based agency Bader Rutter, said the company’s real estate investments will “remain fairly static.” Bader Rutter is opening a new Chicago space designed for more hybrid work, featuring team tables, hotel workstations and other smart technologies — using funds reinvested from any real estate savings.
“We understand that to deliver the best experience for our employees and clients, these premium investments are important,” Jordan said.
TBWA echoed a similar approach in their finances — the company will invest more in call booths, new furniture and shared spaces. “It’s more about how the office is set up, rather than investing in more or decreasing our office space,” Pahladsingh said.