Tom Denford
By Tom Denford
Feb 2, 2017 7:58:00 AM

Will Agencies Save Media Planning From Oblivion?

 

Media agencies will need to meet the demands of clients for greater transparency if they want to have a proper conversation about remuneration says Tom Denford.

Media agencies are under pressure as never before. Clients demand more transparency as well as cheaper prices. At holding company-owned agencies there is also incessant pressure to deliver profitable, organic growth.

It’s a potent cocktail of pressures and the one that has encouraged, aided by lack of client oversight, some media agencies (and holding companies) to build up sources of undisclosed incomes.

Changing that culture and the relationship with clients requires a number of changes at a strategic level for media agencies and some honest conversations with advertisers.

First, media agencies will need to determine what kind of business they are actually in: are they wholly focused on the advertiser and accountable for the value they create; or are they going to seek revenues from the other sources and accept that advertisers may want to pay lower fees for the conflicted value that might produce.

Second, media agencies will need to demonstrate just how media makes a difference. No marketer is going to improve terms and conditions without the evidence to demonstrate value. The key question they will have to answer is: “If you want me to pay more than X% commission I need to believe that my media investment will drive a business outcome, I need to clearly understand the value this is going to create.”

Once both those conditions have been met then the discussion between advertisers and agencies can evolve. Advertisers should always be willing to pay properly for value received where they are confident that their media agencies are not seeking income and revenue streams from undisclosed sources.

Download ID Comms 2017 Global Media terms of Business Report

There should be honest, fair and open discussion on what level of remuneration the agency will need to be able to manage that business appropriately. The exchange is that true transparency will be delivered in return and that any value from rebates or other incentives paid by the vendor in whatever form will be made available to the client as a matter of course. 

Without that conversation the industry – and the major networks in particular – risk disenfranchising its brightest and best people, and those who can add potentially add most value to advertisers’ businesses.

An under-reported side effect of the negativity surrounding media agencies and the big emphasis placed on the commercial side of media is that it can be hugely demotivating for the strategy and planning teams, as well as the agency leadership. 

The damage, however, is most acute when you are a planner, because you are quite removed from the commercial and trading side of the business. Your focus is on developing insight driven strategies and ideas that help advertisers to achieve their marketing and business objectives. The frustration amongst agency planners needs addressing urgently. 

If the agency leadership has the right conversations with clients then this work will be increasingly recognised and they will be in greater demand as a source of competitive advantage. Great planners will be celebrated much more and the agency with the smartest planners will be rewarded for the value they create by existing clients and the new ones that great work inevitably attracts.

If that conversation doesn’t happen and the term “media agency”, which has become somewhat toxic in recent years, reaches a point when it is quite hard to differentiate from all the negativity, then planners will start to seek alternative outlets for their skills.

As more types of businesses – including the major management consulting companies – seek to get involved in the strategic side of marketing, the opportunities for planners will become more diverse, away from the traditional media agency. 

Already we are seeing more independent, strategic focused media agencies opening their doors and even the large agency networks are looking at the market and developing business models focused more on strategic thinking rather than bulk buying.

For planners who passionately believe in doing great work the time has come to find a place where they can genuinely add value and be recognised for the work they can do.

Media agencies and the media environment have long since ceased to be places where the value was solely connected to the buy. If media agencies lose their brightest planners then they will be less able to provide the services their clients need in a future when media is more than a commodity buying exercise. 

But, of course, it doesn’t have to be that way. If agencies embrace the change agenda then their value can only increase, be recognised and, importantly, be rewarded. Once planners become celebrated again, then the media agency industry will thrive once more.

See also: Media planners will save agencies from oblivion