Now Citibank joins lemming-like rush to review big global media accounts

08_citigroup.giUS-based global banking giant Citibank has joined the list of blue chip companies reviewing their burgeoning media accounts. Citi uses WPP’s MEC in the US, which accounts for about half its sales, and Publicis Groupe’s Starcom MediaVest elsewhere.

Other huge advertisers currently reviewing media include L’Oreal, Visa, Coca-Cola, SC Johnson and Unilever.

Given the recent revelations – or purported revelations – about media rebates being trousered by agencies rather than being handed back to clients and the growing evidence that much digital ad spend is lost somewhere in the ether – it’s safe to assume that just about every global advertiser will be reviewing their media, formally or informally. Procter & Gamble recently announced it intended to slice $500m from its agency fees bill.

This is all happening at a time when when global advertising seems to be growing inexorably. A Carat report recently predicted global adspend of $540bn this year, up 4.6 per over last. Six per cent is forecast for 2016.

This seems to be mainly driven by growth in what we used to call emerging markets – most obviously Asia Pacific – rather than the media heartlands of the US, UK and Europe.

But even in these mature markets companies seem unable to rein in their media spend despite employing serried ranks of procurement people, consultants and auditors (companies like Accenture and Ebiquity). P&G blames this extra cost on proliferating media channels (mainly but not exclusively digital) where they think they need to be. More channels mean more media spend and, usually, more agencies to service them.

If our global advertiser friends are really serious about reining in their media expenditure then they’re going to have to decline some big media opportunities rather than trying to do everything everywhere. But that leaves the marketers in charge open to the accusation that they’re missing a trick – and they hate that.

Citibank is reported to be planning to consolidate its global spend in one agency, a common stratagem for clients wishing to cut costs. But there’s actually no evidence that such move does actually reduce costs. It can lead to putting all one’s media eggs into a rather expensive basket.

These coming bouts between global advertisers and their current or potential media agencies will be rather last last weeken’s big fight between Floyd Mayweather and Manny Pacquiao, with the advertisers cast as Pacquiao.

They’ll huff and puff a lot but fail to land a decisive blow. It seems cruel to remind them that Mayweather (in the media agency corner) is also known as ‘The Money.’

One Comment

  1. Hello Stephen. Thank you for this article. Only a few people seem to really understand the consequences of trying to be everywhere and the accumulating incremental costs, not just for the media but for creating the material. There’s still the gung ho approach to Omni-channel rather that what most companies will be able to afford and that is targeted Multichannel. As you’ve said before, it is likely to put pressure on the agencies, but honestly, how far can you squeeze the agencies before you squeeze the life out of them? I’m sure the profits can be extracted, but it’s the people that make up our industry are likely to suffer.

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