Transparency or Black Box, Take Your Pick

The agency world could be heading for a new split. Not one between creative and media – that happened decades ago – but a split between media agencies that run black-box buying services and those that reveal all to their advertiser partners.

That’s the logic of new ANA report and the agencies reaction to it. In the future, the real divide will be between agencies that buy as principals and resell and those that provide truly impartial advice on strategy and every trade they execute. 

Agencies are already taking steps in this direction by investing in principal-based media buying. This means that instead of simply advising an advertiser what and where to buy their space, the agency pre-buys spots and space and then tries to sell them on to its clients. 

It’s an issue that’s already attracting attention, although many agencies point out that clients are made fully aware of these trades and have to opt in to the opportunity



Such moves are blurring the lines between agency and media owner but they also provide an opportunity to rebuild trust. That’s because greater transparency and clearer delineation in these areas could help rebuild the trust between agency and advertiser by making it clear to the advertiser what they were buying and to what level of transparency they were entitled. 

So let’s examine how it might work. 

Those advertisers who simply wanted cheap media could run pitches with commodity media agencies. They would commit on price delivery but not on transparency. It would be the ultimate pitch by spreadsheet and e-auction. 

Advertisers who thought that the price they paid for media was the be all and end all would end up paying negligible fees, if any, and the agency would be free to take rebates from media owners and even act as principal on the media buy and mark-up pre-bought media inventory for undisclosed profit. 

Everyone would be an adult in this process and it would be clear that the holding company’s business model would (in this scenario) be none of the advertiser’s business. 

An advertiser who used this model would have to rely on matching media pricing and business KPIs to ensure that their media spend was delivering value. 

It’s unlikely they would get much access to innovation or creativity but maybe for a lot of brands that’s not as important as the trade press would like to make out. 

Those advertisers that alternatively wanted a more strategic, advisory service would, of course, pay more but in consequence would earn the right to look under the bonnet of the media agency and holding group, the flows of money through the system and have access to the smartest planners and thinkers in the group. 

They would expect crystal clear openness – for example, a powerful justification of the precise level of non-working media in their programmatic buys – and excellent customer service. 

The holding company model in this scenario would move from selling capabilities to recommending and providing solutions. They would be able to combine data and technology to produce smarter, transformative plans that would position media as a growth driver for the overall business. 

Such a bifurcation in the media business model would challenge holding companies or at least their trading units to be much clearer about which business they were in, sales or advisory. 

It would end the internal confusion at agencies, whereby planners want to be trusted advisors but the back room team – hidden away and often giving the impression of reveling in the complexity and confusion of trading – appearing to care less. 

The challenge with this bi-polar model is of course what happens to the brand that wants a bit of both: great media buying, a bit of advice on disruption and transformation and occasional access to a bit of innovation. 

The truth is that probably 90% of brands sit somewhere in the middle of these two models. However, it should be possible to develop a commodity plus model that allows clients to add on additional services while the agency retains the right to trade behind closed doors. 

Ultimately it comes down to the management of expectations – if you know what you and your brand are signing on to, then you have no right to be upset at what happens with your cash, as long as the media promised is delivered. 

If you need a more complex service and are wiling to pay for it then you have the right to expect a trip to the cockpit and the chance to watch the pilot bring the plane in for a smooth landing. 

Determining the right model requires marketers to have a better understanding of media, whatever option they finally plump for. 

As media gets more complex – and offers like this sound enticing but also have serious implications – they need to develop their knowledge of media and build internal resources and capabilities to take more control and oversight over agencies. 

The end goal in this process is likely to be a separation of media strategy and media buying, which could lead to some very different agency business models.

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