The Future in Short (This piece originally appeared last month in the UK title ‘Media Week’)

Recent Cog Blogs have explored the future for media agencies. A UK trade title, ‘Media Week’ asked me to precis these several blogs into one. So what follows has appeared before albeit in not quite this form and on a UK-specific site.

Media agencies are split organisations. On the one hand they initiate original research into how consumers use and are influenced by the many communication channels out there. They develop tools and techniques to allow them to create plans that meet their clients’ business needs. They help measure effect. They use lessons learned to inform future planning. This is the public stuff; the stuff of conference papers and awards.

Rather more privately they’re pretty good at finding ways of making money for the agency out of their clients’ budgets, an activity that leads to them being accused of a lack of transparency, even dishonesty. Surveys into client attitudes towards their agencies regularly come to the conclusion that they are not trusted.

The agencies’ problem is circular. They need volume to be able to afford the talent and develop the tools necessary to understand and drive their clients’ use of communication channels. But their clients see volume as a direct route to lower media prices. Meantime, clients put fees under pressure (by reducing them, by imposing later payment terms and so on). Agencies find themselves looking for income from third parties to supplement the lower fees from the client, in order to be able to afford the tools and talent that help them win the business in the first place.

The media agency’s future depends upon them breaking this cycle. Unless they can sell added value, upstream services to their clients, they may as well invest in some large servers, fire their planners, automate their trading functions and move to an industrial estate somewhere.

Ever since the early 1970’s media agencies have had two primary functions. At its simplest planning is all about deciding who to reach, when, and in what context; whilst buying is about negotiating with those providing the right people, at the right time and within the right context in order to achieve the best prices.

Everything else is about serving one or other of these two functions. Data analytics, along with proprietary research and audience data provides a valuable input into planning; automated buying streamlines what used to be a work-intensive process.

What has gone wrong is that the client’s focus has stubbornly remained on the buying.  This has done the agencies no favours at all (even if it was them that started it). If buying is all that matters; if price is the key discriminator then of course clients will hand a large degree of influence to their procurement teams. Of course they’ll use media auditors. Of course they’ll call a pitch whenever the sniff of a cheaper deal is in the air. It’s rare for an agency to refuse a pitch because of the terms (although well done Starcom for resigning Premier Foods the other week). The argument runs: ‘As long as there’s volume, we can make the revenue up elsewhere’.

Agencies need to change the game they’re seen to be in. Many do excellent planning work. They initiate visionary research programmes. When given the space to do so they contribute to business successes. But still by far the majority of clients still refer to these organisations as ‘media buyers’.

Agencies complain that clients won’t pay for planning and added value services. That’s why they have to look ‘elsewhere’ for revenue; that’s why they have to operate in a less-than-transparent manner. It’s the clients’ fault. They may have a point but as it’s the agencies’ future we’re talking about it’s up to them to shape it.

If media agencies are to have a future outside of that industrial estate they need to talk up planning, and play down buying. They need to brief their holding company bosses to do the same. They need to reinvent themselves.

A start would be to break the financial relationship between client and buyer. Agencies should sell and clients should buy planning expertise. Planners then sub-contract execution to a separate buying division. The delivery of the plan becomes paramount. Right now too often the buyer buys what suits the buyer. The buyer should buy the plan not just spend the budget.

None of this is easy, nor will it happen overnight. But to do nothing except to continue to add specialists, make money unofficially and not to be trusted by their customers is no future. As Ralph Waldo Emerson probably never said: “Build a better mousetrap and the world will beat a path to your door”. As long as you show them where the door is, and why the mousetrap is better, that is.

 

 

 

 

 

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