A Mess Of Our Own Making

The ad business it is generally accepted is in a hole. A large part of the industry is not trusted by those who pay for it and whose interests it exists to serve. Digital advertising is generally so poor that consumers go out of their way to avoid it. So-called precision targeting starts to get close to an invasion of privacy. Fingers are being pointed, mud is being slung. How on earth did we get into this mess?

Although there are many candidates for blame from client procurement, to trade bodies and even the trade press, much of the mud being slung around seems to be sticking to the media agencies and more specifically the multi-agency holding company traders.

It seems that holding companies’ demands for ever higher margins from the media guys to counter-balance poor performances elsewhere have tempted a few of them to put their own interests ahead of those of their clients.

Agencies have always been in a position to keep rebates from media vendors. In some parts of the world this was understood by clients and even encouraged; in others a blind eye has been turned; in still others it has always been seen as a sin. Now is not the moment to discuss cultural differences in attitude towards payments.

But there is a difference between retrospective rebates based on volumes achieved, and the proactive influencing of media plans, driving planners to use certain channels simply because they offer the agency a greater return. You may argue that both are wrong, but the latter is a lot more business critical.

Some traders have now stopped even bothering to deny this behaviour, preferring to attempt to justify their actions on the grounds that their clients have decided not to pay them properly and thus as long as a final price is achieved no-one really cares how it’s been reached.

The fact is these agencies have not managed to convince their clients of their true worth.

When media was a department, as opposed to a business practitioners’ behaviours were of little interest or concern to anyone. It was all a little arcane.

It is easier to concentrate on the job to be done when first the options available are limited, and secondly when the focus on clients is absolute and unchallengeable.

When ad agencies first started moving from privately owned businesses to being publicly quoted there was quite a heated debate about whether or not the needs of shareholders would one day supplant the requirements of the advertisers the agencies were established to serve.

And so it has come to pass.

The holding company model has brought benefits. New skills and talents have flourished in a globally networked world. Local agencies too have flourished as the ad business has over time moved from a cottage industry to something close to a respected profession.

But with hindsight trouble was brewing. Creative agencies started being challenged on grounds of efficiency. People whose nature was to find creative solutions to client problems found it far harder to put hard numbers against what is in truth a soft skill.

Science and numbers met art and beauty and science and numbers won.

If advertisers didn’t value the activities of their creative advertising partners as highly as their business results suggested they should, then the holding companies needed to find another way to keep their shareholders happy. Easier and quicker to do that than to win the bigger argument.

Media was and to a large extent still is a business not really understood by the majority of those buying it.

And just when a few large advertisers started to get to grips with the whole shebang, along came a media form whose processes were so complicated, and so opaque that few outside the digital magic circle tried to understand, and those that did were easily bamboozled.

Out of confusion comes margin indeed.

For many years media agencies have made substantially higher margins than their siblings within the holding companies. They’ve kept the plane flying.

But now the worm is turning. Advertisers have decided that really they should pay more attention than they traditionally have done to how their millions are being spent. Questions are being asked as to exactly why agencies keep recommending media forms that demonstrably haven’t worked.

Investigations have been started; rumours abound; secrets once never shared are suddenly all over the press.

For their part media owners have built direct client teams dedicated to arguing that they should be judged on the true value they bring to their advertisers’ businesses rather than by the size of the rebate they’re forced into giving.

The broad industry must be hoping for a market correction. For all of those spending their clients’ money to remember whose money they’re spending. Certainly agencies need to be paid fairly, but they need to play fairly in return.

If no correction comes the media agencies will continue to spin their web of obfuscation; whilst clients will continue to feel that something’s up even if they’re not quite sure what it is.

Then one day we’ll turn around and there’ll be no quality journalism, no quality TV, no quality advertising and everything will be controlled by a few digital platforms.

And it will all be someone else’s fault.

  1. Dark Brian, dark!

  2. “Science and numbers met art and beauty and science and numbers won.” So true. We accept the science and numbers as gospel, and they most definitely are not.
    Your observations on the travails of the media agencies are spot on and there’s a storm ‘a comin’

  3. I contend that advertisers get the suppliers they deserve and whatever the complexity of the ‘science & numbers’ they have to be on top of it via one source or another. But also, where has all the great creativity gone? Excellent piece, Brian.

  4. I can’t help but agree with Steve De Saulles. If advertisers agree to go with media which ‘demonstrably doesn’t work’ then they do indeed get what they deserve. Presumably alternatives (i.e. ones that do work) are sufficiently more expensive in terms of upfront cost that no one has the guts to recommend them let alone agree to those recommendations. Of course if your budget only has tuppence in it in the first place then you don’t give yourself many options.
    Agree also – great piece. Up to or beyond usual standards. Well worth the money!

  5. Woah. Epic. The best Cog Blog ever written. I will distribute this….

  6. Why is it we can use analytics on everything from baseball to elections yet we continue to use guesstimates on media???

  7. To answer Chuck Southworth– if the “analytics” in baseball were as imaginary and as much based on coincidence rather than causation as they are in digital marketing analysis, then they wouldn’t have any credibility there either.
    Great post Brian.

  8. Another great one Brian – and another copy line to steal “Out of confusion comes margin indeed.”

  9. ‘processes were so complicated, and so opaque that few outside the digital magic circle tried to understand, and those that did were easily bamboozled’ So true, so worrying,
    Great post Brian

  10. Agree , another great piece. And agree with the comment that there’s a storm coming.
    The imminent ANA report may well herald the next phase, but in truth it’s an ongoing process, and the media agencies are the authors of their own destiny. Everything they despise is there because of their behaviours: media auditors; client procurement; the increase in media vendor-client direct relationships; the rise of small independents like BJ&A, IDComms and all the others; and the fact that the Big 4 auditors are about to wade in and start eating everybody’s lunch… It all happens because clients are seeking impartial, honest, independent advice. Truth & Transparency…

  11. I agree with Jeffrey.
    I’ve sent it to my media agency!

  12. Excellent and unlike the business you describe, abundantly clear.
    A major loss of the digital age is the focus on the quality, and therefore efficacy, of the message, now buried and forgotten under the avalanche of numbers. A commercial from memory dramatizes this. A woman proudly annoounces how much she’s saved by buying a big jar of generic instant coffee. Her husband, tasting it, asks worriedly: “How big…?”

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