On this week’s #MediaSnack Tom and David continue the ID Comms 2017 theme of change, this time addressing the impact on media agencies.
As with last week’s edition they seek to address the concerns of people in the business by answering some questions from different perspectives: A network agency CEO, a Media Planner and a Media Publisher
Question 1 comes from a media agency CEO: “We are getting squeezed between demands for holding company returns and clients seeking lower and lower fees. The reality of transparency is that we go bankrupt, how do you see this new business model actually working?”
Tom and David argue that clients shouldn’t be looking to squeeze the agency on fees. There should be honest, fare and open discussion on what level of remuneration agency need to be able to manage that business appropriately. In exchange for that transparency should be delivered
Network CEOs will have to work out what kind of business they are going to be: wholly focused on the advertiser and be accountable for the value they create – data-fuelled insights and efficient buying, for example – or if they are going to seek revenues from the other sources. If it’s the latter, then don’t be surprised that advertisers will not pay you for value they can’t assess.
Question 2 comes from a media planner at an agency: “I’m a bit tired of the negativity and the bad headlines around media, I think we do good work for clients – how does this get resolved, where does it end?”
Tom and David hear this question quite a lot and it can be very demotivating for agencies. This is most acute when you are a planner, because you are quite removed from the commercial side of the business, you often focused on helping your client to achieve their business and media objectives.
Planners, they believe, have an opportunity to disrupt from within, either via the different types of business get involved in the strategic side of marketing, such as consulting companies.
Or it will be via more independent and much more strategic planning agencies. If you are planner, and you passionately believe in doing great work, Tom and David suggest that maybe now is the time for you to find a place, where you can genuinely add value.
Question 3 comes from a major media publisher: “Who is going to change all this? For some publishers to survive the next few years, the media buying model needs to change to make sure that a fair amount income reaches us.”
Tom and David cite a Guardian study where the media owner tried to buy its own ad space and received only 30% of the price thanks to the media supply chain.
They suggest that advertisers share the responsibility to address this issue. They should ask their agency “what does this supply chain looks like” and interrogate all the different elements of it. If they can tighten this up, then more money should go to media vendors.
Such efforts would ease the pressure on publishers who are being squeezed. They must invest more money in creating content but can’t increase the value of their audience.