Commentary

Media Agencies Aren't Going Away -- But Being 'Agents' Might

  • by , Featured Contributor, April 30, 2015

The business of media has changed so much over the past few years that the notion of media agencies being “agents” of advertisers may no longer apply. That’s the message that Irwin Gotlieb, CEO of WPP’s Group M and arguably the dean of the global media industry, delivered to a room full of advertising executives at the ANA’s Financial Management Conference in Phoenix this week.

It’s not the first time Gotlieb has broached this topic recently. At the 4A’s conference in Austin a few weeks ago, he delivered the same message, pointing to the evolution of clients’ expectations and demands over the years and the strain it puts on the classic definition of an “agent.” “As soon as clients began to nudge us into guaranteeing performance, into putting our remuneration at risk in return for performance criteria … I think many of us ceased to function as agents do,” he told a Beet.TV interviewer.

The context for Gotlieb's Phoenix ANA address was the current swirl of allegations of undisclosed agency rebates. He isn’t alone in calling for a reevaluation of how clients and advertisers work together. Media legends Steve Grubbs and Mike Drexler each made the same point directly and quite eloquently in published opinions in recent days. And, late last week, the ANA and the 4A's announced the creation of a cross-industry “transparency” task force to address the issue.

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I applaud the industrywide focus on transparency, and the recognition that the dialogue needs to get into foundational issues, not just the controversy at hand. In fact, I’m hoping that the industry uses this moment to look at an underlying macro issue that is at least partly to blame for many of the problems we're facing today.

Now is the time to for brands, sellers and partner agencies and suppliers to stop managing advertising and media as a cost center. They should instead treat it like the predictable, accountable profit center that it is — and can be even more in the digital, data-driven advertising and marketing world unfolding before us.

Cost-center thinking, where media and advertising investments are treated little differently than procurable, disposable commodities like pencils, toilet paper and heating oil, has failed the industry. We need to restructure goals, strategies, processes and relationships to truly start managing advertising and media as a measurable, predictable and optimizable sales and profit driver.

This goal might not have been possible even a decade ago, but now all media and advertising is becoming digital, or at least digitally measurable. Advertising’s impact on sales – whether short-term or long-term – can now be predicted and proven with high degrees of precision.

If we get in front of this macro issue, we might be able to eliminate the kind of internal conflicts that we live with today, where agencies might be expected to execute designated tasks neutrally, but be compensated not on the performance of the task, but how the task performed — much like a stockbroker being contracted to buy a particular stock, but only paid if the stock’s price rises. Instead, we might see transparent models where task work is compensated fairly for what it is, and performance work is compensated on results, and the presence or absence of other economic incentives or restrictions is explicitly made part of the partnership deal.

I don’t want to diminish the importance of clearing the air and fully understanding the implications of some of the creative business models being practiced today. As a supplier of media and technology to today’s market, I want to insure the playing field is returned to level.

These days, a supplier’s failure to appear as a member of an agency-led pool or consortia, or on a list of preferred vendors, is frequently much more about its unwillingness to participate in non-disclosable compensation models than the suitability, value and performant capacity of its media or technology. Clarity, transparency and alignment of interests will go a long way to removing perverse incentives that might otherwise influence media and technology decisions.

What do you think? Are the days when media agencies were “agents” over? Do you think this is a good time for the industry to reevaluate the whole way we think of and conduct our business?

16 comments about "Media Agencies Aren't Going Away -- But Being 'Agents' Might".
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  1. cara marcano from reporte hispano, April 30, 2015 at 6:05 p.m.

    When it comes to Hispanic media for sales growth, it's not really true that all the work is measurable to the client's definition of measurable, not becaues it doesnt' drive sales rather because oftent he clients have not invested in being able to meet their own definitions of measurable, which sometimes just feel like an excuse for a No to growth. 

    The idea of tying ROI to the buy, that is the idea of hiring the media agency or partner who can drive the best ROI and who is willing to bet with the client on the ROI  (We are!) is great. Someone then has to define well how the sales growth from a good media plan done by a great media planner will be attributed back to that plan. For many clients the sales growth is enough, the results are enough to justify the ROI. For many clients though in search of the sure-thing, they don't invest in the metrics and KPIs they themselves demand and are too risk adverse to practice this strategy and so are being left behind or continue to worship media agency partners who make them feel good about themselves AND do not drive their sales. This is a shame.
    Also the idea that digital is a sure-thing in terms of tracking does not mean it is a sure thing for sales growth or ROI and some clients seem to have these two concepts confused.

    In Hispanic and multicultural some larger clients are looking for a  sure-thing without having invested in the KPIs or even really knowing what they need to do to be able to show and attribute sales growth from Hispanic and Spanish-language media. Ideally with a test-and-learn budget or with true leadership you would see more focus on the question of are the sales up and down over time as a result of this initiative. There are many boutique media firms such as ours and many media planners who would be willing to be compensated and bill according to an ROI model that  guaranteeing performance,along sales performance criteria. 
    Cara Marcano
    Reporte Hispano
    media planning and buying for best ROI
    caramarcano@reportehispano.com

  2. Dave Morgan from Simulmedia, May 1, 2015 at 9:18 a.m.

    Cara, I agree. One of the biggest barriers to treating marketing as a profit center is a lack of clarity about what is measurable. I'm hopeful that we will see more work done on attribution - and causality-based approaches - that will help remove that barrier.

  3. Henry Blaufox from Dragon360, May 1, 2015 at 11:31 a.m.

    One characteristic of our digital realm is the focus on short term results and the pressure to achieve business goals quickly. It is unrealistic to demand instant success, but it seems all the stakeholders involved - marketers (clients,) agencies, publishers, tech and other service providers - seem trapped in this cycle.

    So, how long will it take for the industry to move from Dave Morgan's "now" cost center focus to the "should" of business value and profit driver? And who will take the first step, then stick on that path till a tipping point is reached, making the new business model attainable? It will entail accepting short term loss (of clients, business and revenue) in return for gain down the road. So far, that seems to be waht everyone has been unwilling to accept.

  4. Dave Morgan from Simulmedia, May 1, 2015 at 12:07 p.m.

    Harry, great stuff. I think that it's critical that the goals, strategies, tactics and measurements address both long and short-term results. Dave Poltrack at CBS has demonstrated that TV, for example, can deliver very powerful long-term sales effects. The key is to make the porjection and measurement of long-term results as prominent as short-term ones.

  5. Dave Morgan from Simulmedia, May 1, 2015 at 12:09 p.m.

    Henry, sorry for mistyping your name ... I think that I must have just read a story about the royal prince and had his name in my mind ;-)

  6. Henry Blaufox from Dragon360, May 1, 2015 at 12:14 p.m.

    Dave, no problem with the typo, and thanks for your kind acknowledgment of my comment. Besides, I noticed a typo in my comment (waht, instead of what) after I submitted it - and that's despite proofing it (poorly, I guess) first.

  7. cara marcano from reporte hispano, May 1, 2015 at 4:50 p.m.

    Ask mediapost to let us edit our comments after we post them. WSJ and many web sites give you 10 minutes to read your thoughts on the screen then edit. It is hard to spellcheck on the mediapost site -- good thing modern marketing is more about authenticity than perfection (thank you millenials for this!) and please also do excuse my typos. 

  8. Chuck Lantz from 2007ac.com, 2017ac.com network, May 1, 2015 at 5:32 p.m.

    I agree with cara marcano.  The comment section at Media Post needs an edit and delete function. PLEASE!   This is not the usual social media, anything goes and no one cares comment section. Our real names are attached. We do make errors that we often don't catch until after hitting "submit comment."  Some of us post using iPhones or other devices with impossibly tiny keyboards while using equally impossibly large and less-than-nimble opposing thumbs. 

    Or, we may simply have replied in haste in our rush to accuse Mr. or Ms. X of being a brainless fuzzball, before suddenly remembering that Mr. or Ms. X is also a major stockholder in whichever corporation we work for, or lives next door.

    And while we're at it, how about adding a paragraph function, so thateverythingwetypedoesn'tlooklikethistothereader?

  9. Chuck Lantz from 2007ac.com, 2017ac.com network, May 1, 2015 at 5:33 p.m.

    ...ummmm, ignore that last sentence. Apparently you DO have a paragraph function. Sorryaboutthat.

  10. Arthur Einstein from Loyalty Builders, May 3, 2015 at 5:53 p.m.

    Seems to me that advertising agencies and media companies stopped being agents years ago when the commission system broke apart.  Seems to me, too, that media, no matter how digital or how measurable is a message delivery system and an integral part of accountability has to be the message itself.  Wrong message to right audience penalizes the media company unjustly.  And vice versa.  As for transparency in compensation, it's desirable, but the wrong thing to be busting chops about.  

  11. Dave Morgan from Simulmedia, May 3, 2015 at 5:58 p.m.

    Great points Arthur. I agree that accounting for the creative is where a lot of the ROI attention is going to need to be focused and also that transparency for transparency sake won't mean much. It's more important that the marketers and media agencies are clearer and more explicit with each other about their expectations.

  12. Ed Papazian from Media Dynamics Inc, May 4, 2015 at 4:59 p.m.

    Many times in the past up and coming "hot shot" agencies have invited themselves to become "partners" with their clients on the brand positioning and creative strategy arenas, in effect, offering to get paid only when actual sales results merited it. Some advertisers have used the same ploy with their agencies, proposing a flat, no profit, fee system, with the agency's "incentive" being a small percentage of the sales revenue if the campaign is successful.

    It sounds fine, in theory, but in reality, it's impossible to sustain. Why? Because the agency must not only come up with great positioning ideas and "creative", but sell this to a client who may not agree or "get" the idea. Moreover, a great campaign, even if the client approves it, can be ruined by poor distribution, horrible packaging, false promises to consumers about product efficacy, etc---all of which are not under the control of the agency.

    Both client and agency must share the responsibility for developing successful campaigns, each using whatever knowledge and resources are uniquely theirs as well as working together with some degree of mutual trust. Agency's deserve to be paid for their work, their downside being the ever present risk of being fired when things go wrong---even if it wasn't totally their fault. After all, what client ever fires itself?

  13. Ed Papazian from Media Dynamics Inc, May 4, 2015 at 5:01 p.m.

    P.S.

    Thanks, Joe for the addition of paraghaph capabilities. This is the first time I used it.


    BTW, any progress on the "editing" option?

  14. cara marcano from reporte hispano, May 5, 2015 at 4:52 p.m.

    I agree with Ed on his caveats and think this depends on what sort of partner, brand, product the agent/agency is able to choose to work with and how authentic and genuine the client is willing to be in owning and telling its story.  The idea of tying media and creative to sales is still a good one and I don't think you have to be a "hot shot" to want to get into that. To want to do great work and great media planning that drives sales. That so many folks in this world don't seem to care about tying creative and product development AND sales to the media should be of more concern ot more folks in my opinion. The reality is it is odd to be in business and NOT want your work to be tied to sales. Of course as media folks we do understand that the stories and work we are able to do do depend on product development and risk taking and more 360 degree innovation all the way around.  Tying the client and marketing and media partner closer together in a more entrepreneurial way @ sales is a good idea. 

  15. Ed Papazian from Media Dynamics Inc, May 5, 2015 at 5:21 p.m.

    Cara, if advertiser management, including their marketing directors, were to be candid---an unlikely event---almost all of them would say that they believe that "creative", including positioning strategy as well as execution----is what drives sales, not media. To them, media is merely a  numbers game and its main function is to gain exposure to their ads---targeted, if possible---but, in many cases, not very well due to arbitrary "must buy"and "must not buy" mandates by the client.

    Many years ago, the first wave of media planners hoped that computerized "media selection" models----similar in a crude way to the current "programmatic" concept----would, at least open their clients' eyes to alternative possibilities. That didn't happen and one wonders whether the same thing is being repeated today, even though everyone goes with the flow, with a wink and a nod, pretending to embrace "zero-based" thinking.

    I still wage the fight to integrate media and creative when I can, but I must say that many advertisers continue to wear blinders when it comes to taking "risks" with media, hence they are very slow to investigate anything new and overly demanding of proof--- in advance--- that "it" will work----before investing even small amounts of money in a "strange" ---to them---medium. Obviously, this play- it- safe attitude puts an undue onus on media planners, discouraging them from sticking their necks out, unless the client seems unusually receptive to a departure from the past.

    I know that some of today's media planners are becoming exceptions to the rule, especially with so many new electronic platforms arriving on the scene and the interest being aroused by their targeting and interactive capabilities. And I wish these media guys and gals success in educating their clients about ways to tie in their media buys with their ad campaigns. Hopefully, one day, both media and creative will be truly integrated and both, working together, will be what "drives" sales.

  16. cara marcano from reporte hispano, May 5, 2015 at 5:28 p.m.

    Ed, 
    You are my kind of guy. I think you have hit on something a lot of us think about a lot and it is an intereseting phenomenon of media in the marketing and business circle. Perhaps bringing the PR dollars and merging those two silos would help ?! PR folks aren't a whole lot better respected @ the revenue line than say, media folks at this time and the fact that they aren't given budget to spend in a real media way to me attests to this.  The idea that where the creative goes and how it goes out to consumers over time (AKA media;)   is less important than the creative itself is a funny aspect of being in this business that would be a tremendously fun time to change ; ) The entire idea of media as a bothersome expense is also intersting this idea that media is the realm of the CFO-only all that is also super interesting and seems to be part of a larger struggle to build brands and drive sales.  Also be fun to play in the space of content and messaging as important parts of brand building from ground up. I'd work with you Ed as you seem to get it ! Good times! 
    Cara

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