On this week’s #MediaSnack Tom and David start with news that GroupM, the world’s largest media buyer and ‘parent’ to four of the world’s leading media agency networks is going to merge two of them.
And they continue the countdown to the one-year anniversary of the ANA’s Media Transparency Report, this week looking at Media Trading and how buying and paying for media inventory has evolved over the last 12 months.
The ANA report drew attention to the way media is bought in the US and highlight that in some places, agencies might be making additional undisclosed income from vendor side, which was steering media buying decisions.
A lot of the issues highlighted pointed to the need to clearly define whether the media agency acted as Principal or Agent under the contract. Tom and David reflect on the fact that more and more advertisers are now aware of the distinction of agent versus principal and the implications of both, which is driving clear decisions about which approach suits best.
They argue that there is now clearer language in contracts with media agencies to determine principal or agent status.
In the last 12 months since the ANA report was published Tom and David have also observed clearer differences in how advertisers view the resources they need to buy media in traditional (old world legacy) media and digital (future) media, (with some blurring of boundaries taking place with regard to those “digitising channels” such as Digital OOH).
Advertisers big and small are starting to make strategic plans for the longer-term future of media buying, including recognizing that their requirements for media buying services could be met from a range of different sources, be that a network media agency, a programmatic specialist, activated internally via better self-service tools or negotiated direct with vendors.
Each client will have their preferred mix but essentially, they argue that media buying is about to become more open, fragmented and automated. This means advertisers are investing time and resources to plan for that future and create a model which gives them the flexibility to adjust over time.
Despite this some pitches are still attracting negative headlines for appearing to be focused largely on reducing the cost of media. One recent example from this week is the coverage US TelCo Sprint Mobile attracted after their recent media pitch. The AdWeek headline was: “To Cut Costs, Sprint Picks Horizon Media to Handle $700m Media Business”
Finally, Tom and David look at news that WPP’s Media Buying unit GroupM has announced a merger of two of its media networks, MEC and Maxus. They discuss some of the drivers behind the move and note that this merger comes on the back of a Q1 earnings report for the advertising agency sector which is one of the most negative in recent memory.
The six big holding companies posted negative growth in Q1 for the first time ever and we anticipated this might lead to some consolidation amongst agencies. There are clearly efficiencies to be gained by blending the Maxus and MEC networks and using some of that to fuel the growth of the Essence network.