Pitch Mania

Something very strange is happening. Pretty well every large advertiser you’ve heard of has put its media account up for review over the last few weeks. According to AdAge, the list includes General Mills; Sony; 21st Century Fox; Procter and Gamble; Unilever; Coca-Cola; Volkswagen; Johnson and Johnson; L’Oreal.  There may very well be some I’ve missed.

This is not I feel a coincidence. We are not talking about those small, less-sophisticated advertisers many of whose main driver is to reduce costs. That’s not to suggest that even the largest aren’t interested in a better deal, it’s just that the big guys understand the value of great plans and the benefits of data management and put factors like these alongside straight cost.

Agency managers have been quick to herald this flood of pitches as proof positive that advertisers have finally recognised what they (the agencies) have been preaching for years. Their future-gazing is they say finally coming to pass. This they contend is the dawn of a new model, based around integration, joined-up thinking, big data analytics and the rest.

I’m afraid this is self-delusion, writ large.

I suspect this flood of pitches is about a new model, but I doubt it’s being driven by agency far-sightedness.

My suspicion is that this has come about as a result of our old friend ‘transparency’, along with his mate fraud.

I spend a fair bit of time with large advertisers. Indeed I was invited to speak to a WFA group some months ago about agency models. After my remarks I was approached by several large players wishing to speak to me one-on-one.

The general message was: ‘We have been with our agency for many years (by ‘agency’ they mean Mindshare/Mediacom/Starcom/Carat etc) and we love them. They do great work. But we are not happy at all with their digital trading desks (by which they mean Xaxis/Amnet/Vivaki/Annalect and the like). Our agency contacts are equally unhappy with their trading colleagues; but they seem unable to do anything about their behaviour. What should we do?’

Since then we’ve had the Jon Mandel revelations in the USA; as well as the thoughts of the analyst Brian Wiesler. Wiesler has already commented on the pitch flood as justification for his decision to advise his clients not to invest in the holding companies.

The stakes have been raised – the holding companies, who (and this has to be a guess as they don’t publish financials by operating division) make disproportionately more margin from their media operations than from anywhere else, are under pressure from their advertisers to act. The dilemma is how to do so without killing the goose responsible for all those lovely golden eggs.

Well, now the advertisers have spoken. If as an advertiser you’re told that your partner agency is unable to interfere in trading matters for contractual reasons, then what do you do? You change the contract.

And if your friendly partner holding company isn’t happy about doing that, and tells the middle managers at the client that they’re not prepared to negotiate, then your best bet is to remind them who’s money this is and call a pitch.

Of course these pitches could all be the most extraordinary set of coincidences. But like Bob Hoffman, the Adcontrarian I don’t believe in coincidences.

The interesting thing to watch over the coming weeks will be to see who wins. After all, if all the holding companies are up to the same tricks within their media operations, then it’s a fair bet that the winners will be those prepared to offer up a new model – one based on fairness and full transparency.

And wouldn’t that be a thing?

  1. Yes…and…there is a whole new world of direct to digital negotiation going on where advertisers contract directly with Facebook, Vice etc…I think these carve outs are also part of a new world order.

  2. Agree with this. But since every agency is now GUARANTEEING an eight figure media cost savings number in their pitch… that might be an added incentive for placing one’s media account in review.

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