Media Agency Consolidations In 2013: The Important Impact For Clients
The recent trend in media agency consolidations and acquisitions continues unabated – with some clients feeling somewhat bruised that the needs and requirements of their businesses are seemingly at the bottom of the holding companies’ list of priorities. Promises made when accounts were awarded are now perhaps starting to ring somewhat hollow.
Consider for example the reaction of Volvo’s Global VP of marketing, Richard Monturo who astonishingly claims to have found out about the LBi and Digitas merger via the Ad Age website (Volvo’s lead digital agency is LBi). Aside from being rightly aggrieved at the lack of courtesy shown by his agency in failing to notify Volvo of the merger, Monturo is concerned about the potential threat to his business given that Digitas’s largest client is General Motors. Fearing that his business will no longer be such a high priority for the newly formed DigitasLBi, due to their handling of a much larger American competitor, Monturo is understood to be considering whether or not to review the business.
Similarly, the news that the global CEOs of both Initiative and sister agency Universal McCann (Jim Hytner and Jacki Kelly) have taken roles“upstairs” at IPG Mediabrands is fuelling rumours of a potential merger of the two agencies (which Hytner denies), or of a repositioning of Mediabrands as the lead IPG media offering. Whether or not either proves to be the case, what is certain is that talk of agency consolidation triggers uncertainty in both clients and agency talent, generally leading to changes on both sides.
A merger of two media agency brands will inevitably create client conflicts and lots of potential distraction for key talent – especially if (as is usually the case) this causes some of those agencies’ clients to begin media pitches which draw management away from the day to day business of running the agency. This also tends to provide a distraction to the agency’s top talent who normally see such consolidation as an opportunity to either win or lose. These key players will start to spend more time jostling for position than they do striving for their clients’ success.
Consolidations are a natural part of our volume driven communications market – whilst media success continues to be biased towards achieving cheap pricing then agencies will always care more for scale than quality – and that doesn’t look like changing soon. Designed to make companies stronger they can temporarily lead the company to be weaker and vulnerable to client and talent exodus unless managed carefully.
Four bullets: Our advice to clients in this position
- Be proactive with your agency where you can be (Volvo haven’t had this option). Don’t wait for the agency to dictate their consolidation terms to you – ideally they will be consulting you prior to any decisions.
- Have a clear point of view of what success looks like for your brand under the new structure and request a list of the information you need to be able to manage the news internally to the right teams at the right time in the right way. Allowing your client to read it on AdAge may be beautifully democratic but it’s not ideal.
- Get a clear sense from the agency how much of a priority they regard you – will you be a 2nd tier client for example / will you lose your key talent?
- Be clear what the agency’s consolidation plan and timings are so you’ll be clear where and when the distractions might occur – are these in your key sales periods for example or your key planning windows?