Amex Sticks With MindShare, Signals Shift In 'Mandated' Media Reviews
Although it is common for incumbent media shops to win reviews for consolidating media accounts across multiple agencies, mandated reviews usually signal a troubled client/agency relationship or below-par service that typically ended with a new agency winning the business. And while the circumstances surrounding incumbent Initiative Media's retention of AOL's mandated media review in February may be very different than what led American Express to stick with MindShare, a well-placed media services consultant says to expect more of the same in the future.
"I think we're seeing the beginning of a trend here--where clients mandate a review to get the attention of their incumbent agency," says the executive. "In many cases, they may have no desire to change agencies, because it's become extremely difficult to rip out your media agency and put [in] a new one."
This, in fact, appears to be exactly what happened in the pitch for American Express's $350 million-plus account, which came down to the wire with two strong outside contenders--Carat and Initiative Media--before being handed back to MindShare.
"What we looked for was the agency that we thought was the best one for the capabilities and resources that suited our needs," explains American Express Spokesperson Judy Tenzer. "MindShare was the best at that."
Tenzer says American Express arrived at that conclusion after the extensive review, which began late last year. "They were the ones who best understood our brand," she adds.
Analysts say this is both a positive and troubling trend for media agencies. On the one hand, it suggests that media has become so strategically intertwined with a client's business that it is no longer easily dislodged. On the other hand, it is still regarded by many clients as a commodities-based service that fails to provide the kind of compensation necessary to support the service expectations of clients. Thus, what observers say could become a round robin of mandated incumbent media reviews.
"The good thing about being a media agency is that you're into the financials of the company, so it's very hard for a client to cut you loose from their business. If the client doesn't like the creative they see, they fire the creative agency and hire a new one. It's not as easy for them to do that with media," says the consultant, noting that the situation has been exacerbated by the consolidation of major media agencies. "Basically, the business has consolidated to the point where there are only a handful of giant media agencies that can service these types of accounts--and the only way a client can wake the sleeping giants is to throw their account into review."
The trend has other implications for the media services industry, especially with regard to prospects for new business. If the pattern continues, consultants say there will be a relative scarcity of new business--with the exception of account consolidations, or new company or product launches.
"There aren't a lot of easy pickings around anymore. You're not going to see things like MindShare's growing by $1 billion in new business a year for three years straight," says the advertising consultant, adding: "New business may be harder to come by, and that's why agencies are trying so hard to retain existing business."