The media agency model has received more premature obituaries than email marketing, and that's quite a few. Today it's tempting to dust off the old arguments and give them another airing, given that
WPP is flatlining and merging agencies like an overactive wedding planner.
Billings are down 5%, like-for-like, and Sir Martin Sorrell has referred to 2017 as "not a pretty year" where margins
and revenue are just flatlining. But does this spell the end for a model or an individual company that is still making a post-tax profit of GBP1.9bn? It's unlikely.
There is a lot of truth in the
arguments made about media agencies. There have been massive transparency issues. There are rebates that agencies feel their budgets earn, but they don't always see returned and might lead an agency
to place budget where the sweetest kickbacks are. There has been a woeful lack of attention given to viewability and brand safety. It's easy to forget the two YouTube brand safety boycotts of last
year resulted from an investigation at The Times, not a sharp-eyed media exec.
Then there are the potentially damning insights that, as an Adobe study found, nearly
two in three brands anticipate taking their programmatic spending in-house within five years.
The pent-up feeling that the model could do more for the people who throw money in at the
top of the funnel and the sentiment they could just do it for themselves have been palpable for the past year or so.
Little wonder, then, that so many big names are calling media
reviews. HSBC, Shell, Asda, Sky, Mars and Coca-Cola are all, according to The Drum, reevaluating their media accounts just a couple of months into 2018.
I remember looking at this before. A couple of years ago we had a massive raft of
media accounts being renewed. The inconvenient truth for those writing off media agencies is, they largely just changed hands. They didn't go off-grid or set up on themselves, they simply moved shop.
The individual agency relationship ended, but the business model was not replaced.
Since then we've had 2017 as the year of the transparency debate and that appears to be bringing in change.
Fundamentally, though, there are a couple of reasons why big brands are likely to stick with the big agencies.
The big guys get the best deals on media. It's probably the original reason for
picking a big agency but it still holds true that their purchasing power can get brands a better deal.
The big media agencies are where the smart people are, the best buyers and planners and
strategists don't pop out of a programmatic platform for you, they're developed over years of experience. And all the tools that a company believes it can use on its own, a media agency can use for
it.
What will most brands choose, the heavy lifting of setting up on their own, or employing the experts who get the best deals on media?
Sure, some will do their own thing and
that doesn't mean they won't come back to the agency model at some stage. The majority, I believe, will stick with a media agency.
But here's the rub. Brands are realising they do need as many
agencies doing as much stuff for them. Both P&G and Unilever are leading a charge here to halve their rosters across the world and assets are being made to work longer for harder.
The model will survive, but there won't be quite as much need for so much of it from so many different people! So expect to see WPP et al merging agencies, and on the human side, announcements that
merged agency heads are off looking to explore new opportunities.