Publicis Media = 30% Of Total Revenue
- by Joe Mandese @mp_joemandese, March 16, 2018
At a time when the compensation and fees -- especially rebates from media suppliers -- are under greater scrutiny than ever before, an analysis of a major agency holding company indicates its media services account for nearly a third of its revenues.
“Media agencies are critical to holding companies because …
Reminder: You are seeing this premium content because you are a subscriber to MediaPost's Research Intelligencer and/or a member of the Center for Marketing & Media Research. This content cannot be viewed by non-subscribers/non-members.
Not surprising as media CPMs are rising and ad spending in total keeps increasing---even if some media---magazines, for example---are having difficulties. As a guess, I would think that the typical agency conglomerate makes a greater profit on its media functions that many others---as Brian is suggesting----but without "creative", account handling, etc. they wouldn't rally be agencies anymore...would they?
This really seems to be more of a reflection of the state of advertising, in that clients are spending all time records on their marketing budgets. While the Super Bowl to me is the only line item that is out-of-whack with design/management fees, it stands to reason that increased ad spend means more getting to market, and as such, the media driven revenue is up right along with the ad spend.
We have to bear in mind that when an aagency AOR---"agency-of-record"---is assigned to buy TV ---or any media--- for a client and handles all of its brands, including those that are not serviced by the agency's account groups and "creatives", that such fees are usually paid by the other agencies, not necessarily by the client----out of the other agency's commissions. In the past, the various corporate AOR media assignments were parcelled out across several agencies to try to even out their fee payments but this may be much less the case today. In any event, I assume that the 30% figure cited in this article refers to AOR and other media servicing/buying fees, not necessarily to total client media billings. The fees vary significantly, depending on which medium is involved with digital very high and national TV very low.
The 30% is not a "fee" number, it's the percentage of their revenues. The author drew an initial comparison to transparency in fees, that ultimately had no bearing on the article - as this is not about shops charging 30% commissions. It's where their overall revenue is coming in from.
@Michael Hubbard: The author (me) drew no such conclusion. I think you mean a reader (you), inferred one. No one said a "fee" number was a percentage of revenues. Increasing scrutiny over media agency compensation, including direct ones like fees and indirect ones like rebates, is important context for undrestanding the amount of revenue media services operations are contributing to parent company revenues.