Commentary
The Five Reasons For The Media Agency Pitch Avalanche
- by Maarten Albarda , Featured Contributor, June 8, 2015
Death-by-agency deals. Although not the only reason, the fact that the ANA and many other advertiser associations have shed a light on unsavory aspects of the way agencies are allegedly buying and (re)selling media deals to their clients is a major factor.
And it is not just media deals that are to blame; the way that agencies have managed trading desks is seen as equally bad. Advertisers are, at minimum, highly suspicious, and want to explore if there are better options out there.
Marketers are more digitally educated. Many marketers are becoming much more digitally marketing-savvy than before.
Last week MediaPost’s
Joe Mandese reported that the fastest growing category of Ad Exchange seats
(those in the programmatic media-buying marketplace) was marketers, and not agencies or content creators .
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Marketers have created social media competencies that are becoming true business drivers (think travel, banks, insurance and other service providers). Plus, many marketers now offer products that have digital baked into them (think cars, TVs, watches, phones, wearables, etc.). So while in the past agencies could perhaps claim digital superiority, marketers now very often know more about digital and data than their agency counterparts. Some of these reviews are driven by marketers looking for smarter partners.
Better integration. Marketers are also demanding more fully integrated, screen- and touchpoint-neutral strategies and plans. Agencies will argue that many marketers say that they want better integration, but their briefings are still very directive and silo-ed. I would agree this is often still the case. But at the same time, marketers are actively seeking solutions through reimagined internal structures and processes. The reviews are probably a reflection of that.
Cutting perceived fat. It is certainly a fact that all media agencies have recently reported decent to very strong Wall Street results, leading to the marketing procurement folks thinking there is still “fat” to be stripped. It doesn’t exactly help in the “woe is us” storyline that agencies like to bring up when talking about fees and profit margins that WPP’s Sir Martin Sorrell is actually the highest-paid CEO in the U.K. Add to this the perceived significant income from non-transparent media deals as outlined in the first point above, and another argument for a media review is created.
The macro-economic environment. And finally, the economy is relatively strong, and perhaps some marketers had put off looking for a better agency solution before. Others are still trying to stage a comeback from the economic downturn, and a third group is feeling serious pressure in today’s economic environment because their consumers have recovered but have developed alternative purchase behavior more aligned with their lifestyle and life stage.
As history has taught us, seismic shifts are seldom explained by one major reason. Far more often, it is a whole bunch of reasons that all of a sudden lead to a tipping point.
What does not make sense to me is the list of agencies included in the reviews, as many marketers seemed to include the “same-old, same-old” usual suspects. If you truly want a different outcome, change the ingredients!
Maarten, your last paragraph probably gives you the real answer. Why are the same agency media buying/planning names included in so many of these reviews? Why not "new" faces?.
The answer, at least where media is ---and mainly, "linear TV" ----is concerned is that many--not all, but many----of these reviews are a mandarory part of "the system" and are not driven by alleged "scandals", overpaid bigwigs, the quest for a better handle on digital, "programmatic", "big data" , etc. They just have to be done every few years to keep the media agencies on their toes and, occassionally, to prod them into operating tighter "ships". Until media is integrated with account work ( marketing ) and "creative" you cant expect major changes in the overall branding advertising system. Media shouldn't operate in a data driven vacuum---it must tie into marketing and creative to be most effective.
Ed: I think you are absolutely right. Perhaps reason #6 is "The Mandatory Review". At the time I was there at AB-InBev and at Coke we said we would do it every 3 years regardless of performance. Some today might indeed be driven by that in-house rule.
But... it just seems to me too much of a coincidence that so MANY are now happening all at the same time. I don't recall 3 to 4 years ago there being an "avalanche" like this which would explain the current one if there had been one back then. I think there is more to it than "mandatory". Where there is smoke...
There have been so many mergers and aquisitions that a change of agencies lands the client at the same place. And the corporate giants with multiples of accounts want a behamoth/be hav mouth agency to handle everything along with more negotiating power. This creates the bedrock for miscalculation and misappropriation infestation.
As the author wrote – it's a multitude of reasons. Media reviews just don't occur as frequently as creative or digital searches. However, with the agencies building their own trading desks and transparency becoming less so, marketers using media mix modeling tools either inhouse or through non-agency third parties, and the rapidly morphing channel options, marketers are reconsidering how they manage their media investments.
As for all the noise over media "kick backs", this is largely a non-USA problem. These "big media reviews" are with global brands that are looking to better control their media expenses and increase transparency in foreign markets, so if you're a global media agency with a global advertiser – you're likely to end up in review over the next year.
That being said, we're handling a few media reviews for domestic brands for totally different reasons. They feel like they're too small a fish in these big media agencies and don't get time devoted to innovative thinking.
Anyone who has spent time with a large corporate client this year knows that 99% of this is due to #3 and #5 above. All year long clients have been pressed by snr mgt to plan, replan, rebudget, cut, trim, etc. (how about that negative Q1 GDP, eh?).
We are now into the 2016 planning cycle for many corporates. The mandate comes down to "cut your biggest line items by 5% minimum." Media spend stands out like a sore thumb in that regard. So the CMO or EVP Marketing says, "I don't know how to reduce media spend. Let's do a media agency review and see who can do it for 5% less."
This is not about clients "taking control" of media. It's a much bigger beast than a couple people on a "programmatic trading desk." If clients could do it on their own, there would be NO media agencies invited to the "new review" - not 5 or 6. Net: cutting fat in a still-crummy macro-economic environment.
Love your last sentence: "If you truly want a different outcome, change the ingredients!" - I understand that for a proper pitch, you need comparability, but it is beyond me how this necessity limits every single marketer in every single pitch to choose between five different shades of vanilla every three years. Open up, people!