- VaynerMedia started 10 years ago as a scrappy social-media agency and has grown into a holding company, VaynerX, that’s more than 800 people strong.
- Led by the divisive Gary Vaynerchuk, the holding company, VaynerX, houses six businesses including analytics, consulting, and digital media, and has blue-chip clients like GE and Chase.
- VaynerMedia says it racked up $131 million in revenue in 2018, projects 15% growth this year, and is profitable.
- At a time when agency holding companies are under attack, VaynerX boasts it’s truly differentiated from industry giants like WPP and Omnicom and is winning business from some of the industry’s titans.
- Detractors and even fans say the agency has come a long way but has to grow its international presence, creative chops, and talent to truly compete.
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As the advertising establishment heads to Cannes for the annual, rosé-soaked ritual of making deals and collecting awards on the French Riviera, Gary Vaynerchuk wants the marketing world to know there’s a new type of agency holding company in town.
Vaynerchuk and his brother AJ started VaynerMedia with a scrappy social-media agency operating out of borrowed space. It’s since grown into an 800-plus-person sprawling holding company, VaynerX, with six businesses including analytics (Tracer), consulting (The Sasha Group), and digital media (Gallery Media Group). It boasts blue-chip clients including GE, Mondelez, and JPMorgan Chase.
The list of criticisms of Vaynerchuk is long and well-chronicled: He’s a flagrant self-promoter whose social-media showmanship serves him more than his clients, his stakes in social-media platforms present conflicts of interest (VaynerX has said it discloses those relationships), he runs a sweatshop, he’s a one-man show, and all he’s selling is hustle. (A 2014 Fortune headline asked: “Is Gary Vaynerchuk for real?”)
But as VaynerMedia marks its 10th year, Vaynerchuk, the agency’s CEO, claims that VaynerX is the antithesis of traditional holding companies like WPP and Omnicom and is vastly underestimated in its ability to disrupt the industry’s giants.
“We’re in massive growth mode,” he told Business Insider in a wide-ranging interview. “I genuinely do believe over the next decade that people are going to realize how historically correct we are with our strategy, creative, and media, and that there won’t be a significant second choice. I do not believe that holding companies will be able to reform their companies to get to this religion. And I don’t see any independent shops that are close enough to become a meaningful competitor. So I’m feeling quite confident. I do not believe the industry understands how big we are still.”
WPP and Omnicom haven’t responded to a request for comment.
Vaynerchuk says his agency is faster, more productive, and more accountable than the holding companies
The traditional agencies are at peak vulnerability. The ANA exposed them in a scathing 2016 report for ripping off clients; marketers are demanding more accountability of them; and new competitors are coming in the form of consulting companies, publishing houses, agency alternatives like Sir Martin Sorrell’s S4 Capital and You & Mr. Jones, and marketers themselves who are doing more of their advertising work themselves.
But what exactly does Vaynerchuk bring to the table that’s different?
He lists a few things:
- Speed. Vaynerchuk built a personal brand around hustle, which extends to the agency. “We win a piece of business and go into immediate content creation, not into six weeks of strategy to make a 30-second spot,” he said.
- Volume. Vaynerchuk believes most brands are screwing up their digital advertising by not doing enough testing. His way involves creating messages at high volume, then optimizing to what takes hold. “We’re taking over some brands that would make two videos for digital and like 15 to 50 assets in banners or preroll for the year, and we’re producing 50 tweets on day one,” he said.
- Sales results. Vaynerchuk said VaynerMedia exists not to win awards but to help clients sell more stuff while growing their brands (expertise he actually hopes to use to buy and resurrect distressed consumer brands some day). He said his approach of producing a ton of social campaigns has produced significant retail sales increases for clients. While traditional agencies are just starting to change their compensation structure based on clients’ demands, Vaynerchuk said he actively seeks to be compensated based on his ability to help clients’ sales.
- Independence. VaynerX doesn’t have the quarterly pressure of the public holding companies, which he argued lets him invest in and serve his clients better than an agency that’s beholden to Wall Street.
Scrappy success story
There’s no doubt Vaynerchuk’s story is one of a scrappy success. A Belarus-born entrepreneur who parlayed his family’s wine store into an online wine business, he’s proud of his outsider status, and professes to know little about the agency landscape. He started a social agency out of a conference room when no one was doing social and impressed clients with his own extravagant social-media presence. He’s a reliable provocateur who, from the stage at an ANA event, once challenged agencies to let brands out of burdensome contracts, saying: “Change your fucking contracts, dicks.”
VaynerX the holding company has grown more than 800 people all in without taking outside funding. VaynerMedia the agency took in $131 million in revenue in 2018, projects 15% growth this year, and has been profitable more than six years, according to a spokesperson. (Top holding companies WPP and Omnicom’s had worldwide revenue of $19 billion and $15 billion in 2018, for comparison.)
VaynerMedia has come a long way from its conference-room roots, with 25th-floor offices in a Hudson Yards skyscraper overlooking the Hudson River. In addition to New York, it has offices in London, Los Angeles, and Chattanooga. It’s opening an office in Singapore this summer and Vaynerchuk says South and Central America are on his mind for future expansion.
But beyond hustle, is VaynerMedia really reinventing advertising? With clients, speed and social-media expertise are often first to come up in talking about the agency’s selling points.
“I used to live across the street, so I’d go over there,” said Jon Halvorson, VP of global media for Mondelez, who’s known Vaynerchuk ten years and competed with him when he was on the agency side. “Watch. People are constantly moving.”
GE recently moved a “significant” amount of its digital media budget to Vayner from Decoded, a 4-year-old creative agency, adding to the social and community management work Vayner was doing, said Sam Olstein, executive director of corporate marketing at GE. Vayner creates social campaigns for GE that tend to be about inserting the brand in culture.
“When we need to act with speed and purpose and humanize our company, Vayner’s the first call we make,” Olstein said. A campaign to insert GE in the solar eclipse event last year was done in about two weeks, “probably about half the time of a normal agency.”
Clients say VaynerMedia’s produced results
Some clients said Vayner’s benefits go beyond speed.
In 2018, Mondelez moved its North American media business to Vayner from Carat (part of No. 6 holding company, Dentsu), which Halvorson said was a watershed moment in showing Vayner had grown from just being a social-media agency. He said Vayner co-produced Mondelez’s personalization-at-scale approach to marketing, which he called “huge,” and which has produced sales results for the snack company.
JPMorgan Chase last year appointed Vayner as its agency of record for the burgeoning area of voice. JPMorgan Chase CMO Kristin Lemkau said social campaigns that Vayner’s done have “performed very well.” Lemkau called Vayner one of Chase’s “top three” agencies in the US handling its planning and buying, alongside Zenith and famed creative agency Droga5. Chase also has an in-house agency.
When asked about Vayner’s limitations, though, clients said Vayner’s just getting off the ground internationally, which holds it back in getting global assignments. It also still has a reputation for being too tied to Vaynerchuk the person and isn’t especially known for creative talent or longform video. (Steve Babcock, Vayner’s first chief creative officer, left earlier this year after three years, as did Justine Bloome, its chief strategy officer, after about two years.)
“Being able to enhance their creative chops into the emotional storytelling and more longer-form narrative creative would be helpful,” Olstein said. “I also think if they did some more work with publishers like custom partnership, where you’re pairing a brand with a media owner that brings an authentic voice, and being able to weave those together, would also really help.” As an example, he cited GE’s recent sponsorship of a special audio issue of The New York Times Magazine, for which it used the agency Giant Spoon.
Vaynerchuk as a one-man agency
When asked to name Vayner’s weakness, Lemkau echoed a point others have made: “There’s only one Gary and he’s got a really, really full plate. That’s what makes him great. They’ve got some talented people, but it’s still a very Gary-driven business. Because of the size of his personality, that’s a hard thing to scale.”
Vayner’s strength in social media also makes it especially vulnerable to the in-housing trend, said Greg Paull, co-founder of R3, a consulting firm to marketers, which named VaynerMedia a top social-media marketing firm in 2017. “A chunk of what they do, marketers are looking to, ‘How can I do this directly?'” he said.
Vaynerchuk argued his outsized role helped the agency win business early on when rivals thought his agency was just him and a bunch of interns.
But Vaynerchuk’s point was that he’s since hired a bunch of senior talent, including Jeff Nicholson, chief media officer, formerly VP of advertising at SocialCode; Andrea Sullivan, chief marketing and chief client officer, from Interbrand; and Claude Silver, chief heart officer (Vayner-speak for HR head), from Publicis. The company just did its first Super Bowl ad, for Planter’s. He said the company was looking to fill chief strategy and chief creative officer vacancies.
As for in-housing, Vaynerchuk said he’s confident he’ll get enough new business from rivals to offset any negative from brands taking work in house, and that once there’s an economic downturn, brands will let those people go to cut headcount, sending more business back to the agencies.
Vaynerchuk did acknowledge that staying fast and nimble is a challenge as VaynerMedia grows. The solution, however, he said, comes back to Vaynerchuk himself.
“You’ve got a strategic undertone to this creative product, which inherently sometimes makes people want to slow it down,” he said. “People are by nature cautious, defensive, insecure. Clients by nature are risk averse. It’s the CEO’s job to dictate the tone and what’s most important. And I think I beat the drum of speed and this volume concept at scale.”
Vaynerchuk is in something of a Catch-22 position. He says he likes being underestimated. But at the same time, asked what the next significant win means for him, he sounded like someone who yearns for confirmation and insider status.
“I would love to get the full media and full creative, 1975-Leo-Burnett-like business for a top-50 brand,” he said. “Where, after a year, it became obvious to everybody that our product and services are the way to go because the business for that brand exploded or had a meaningful shift in the right direction.”