Commentary
Record Media Account Reviews: Fall Out From the Rebate Issue?
- by Brian Wieser , May 26, 2015
An unprecedented number of major media agency accounts have gone up for review since much of the industry became aware of practices related to undisclosed agency compensation. The scale of these reviews reinforces our view on the sector and recommendation that investors exit it or stay on the sidelines for …
All of the reasons mentioned in this article undoubtedly contribute to the many current and future reviews. Media transparency is becoming an increasing issue, and advertisers want their fair share (even if the US-rebate model is structured differently…).
As an intermediary on some of the above-mentioned media pitches, I however also see other factors leading to advertisers' decision to engage in costly reviews:
1/ Advertisers expect their agencies to seamlessly collaborate with technology and content partners both within and outside the traditional holding group model. Until now, agencies have been reluctant to go down this route, so many clients use the pitch to explore new agency and service models.
2/ Most advertisers acknowledge that media planning and buying is increasingly built around highly measurable data points, hence they use the pitch to explore long-awaited agency remuneration models shaped around agency output and business outcomes.
3/ The pricing structure in the US media market is in itself very opaque as there is no view over supply and demand for individual properties. Adding that agency holding group inventory deals are gaining pace, many clients use their pitch to not only beat legacy pricing, but to create a situation where they benefit disproportionately from much cleverer deal structures.