There has been a lot of discussion about “rebundling” or reversing the now prevalent agency model of separate agencies for creative and media.
In the late 1990’s, most of the major holding companies, as well as many clients, had come to the realization that the ever changing and increasingly complex media landscape required far more attention to media than most “full-service” agencies were then equipped to provide.
The solution was “unbundling”--the creation of media-specialist agencies that offered aggregated buying power and other efficiencies. The holding companies sold unbundling to their clients as a way to get a “best in class solution,” even if that meant they would have to significantly change the way they did business. One of the ways that issue was mitigated was reduced cost. Most clients ended up paying less for unbundled services than they did when they worked with a single full-service agency.
There were, of course, significant drawbacks to this model: Clients were forced to manage at least two agency partners rather than one, and for some, the number of shops on their roster increased when ultra-specialized agencies were engaged such as search, social, and digital media. But the biggest drawback only became obvious over time: Media and creative agencies collaborated far less with each other than full-service creative and media departments did under the full-service model.
In recent years, many of the clients I worked with bemoaned the extra time required to deal with multiple agencies. And while they mostly accepted the idea that specialist media shops were more likely to provide best-in-class solutions compared to the way media was handled “in the old days,“ they couldn’t help but wonder if something had not been lost.
Would a “big idea” creative solution be ignored because it didn’t match up with the media solution being proposed -- or would a media solution that had the potential to drive a great creative idea never reach the creative team on the brand, because the media and creative agencies rarely interacted? And how is the ever important management of data analytics handled across both agencies?
Insights gained are critically important to both media and creative strategy. In some cases, clients had to hire yet another resource to manage their data analytics.
A partial answer to those questions was enacted by a few of my past clients, particularly those who simply hated the endless series of meetings that dealing with multiple agencies required. Instead, they scheduled multi-agency meeting days, which enabled them to brief all of their agencies at once. That partially solved the problem of agencies not always being on the same page vis-à-vis the client’s issues or strategy.
But a fundamental weakness in the process still remained: the agencies didn’t interact enough once the meeting was over. So instead of getting a great advertising solution, the clients, in many cases, got good media ideas and good creative ideas.
Is this unbundled model the best way? Maybe it’s time to find out.
For one thing, a number of stand-alone media agencies have been under the gun in recent years, driven by the ANA investigations into media transparency, rebates and steering media budgets to more profitable channels. The result has been an endless series of agency reviews as clients try to get ahead of those problems. Inevitably, some of those reviews ended up being decided almost entirely on price, which resulted in many media shops having to operate on razor thin margins.
All too often, this simply resulted in a “you get what you pay for” relationship, which serves neither the advertiser or media agency well (even though it’s beloved by client purchasing folks).
Maybe that’s why we’re beginning to see a revival of the traditional full-service agency model. A few truly innovative creative agencies are bringing media buying back in house and aggressively investing in the systems, tools and talent necessary to deliver truly integrated creative/media solutions to their clients. Obviously, these commitments are costly, but at the end of the day, they very well may pay out.
But another trend also needs to be watched closely: clients bringing media capabilities in-house. While some large brands that experimented with that model recently abandoned the idea due to its cost, the challenge of finding and retaining first-rate media professionals and an inability to keep up with technology, it is still of great interest to some. And that will continue to be a threat to media agencies.
As the media agency business continues to evolve to automated media buying, will our services simply not be seen as useful and necessary by clients? Will they want to own “black boxes” themselves, cutting agencies out of the picture altogether? And where does that leave the critically important strategic side of our business?
Creative agencies are also being challenged. More and more clients are hiring agencies on a project basis rather than on an AOR basis. This makes it very difficult for them to keep top talent and deliver their best work, not to mention the financial instability it brings -- yet another motivation that positions rebundling in a positive light.
The answer, I think, could very well be a business model that for more than 100 years delivered great work and generated terrific revenue for clients and fair profits for agencies: the full-service agency model.
Imagine an entire team of talented advertising professionals working together on behalf of a client -- instead of a disparate group of companies that barely talk to each other, much less collaborate with each other, competing with each other for pieces of the client’s budget.
Somewhere up in advertising heaven, it’s very possible that Leo Burnett, David Ogilvy, Bill Bernbach, Raymond Rubicam and Jay Chiat are all smiling, saying to themselves “we could have told them so.” The return to the full-service agency model is such a provocative idea that it almost seems brand new.
The main reason for the creation of the large "media agencies" was the rise of independent buying services, coupled with the realization that "media"---- especially AOR assignments--- could become an agency profit center as opposed to a drain on profits. It was not because the media planning and buying functions suddenly required more attention in their own right. Putting it simply, you consolidated the media work from a lot of shops into one big media agency. This meant that a media buyer who once handled $4 million of business could handle $25 million with only the added cost of Nielsen ratings based on billings and a little extra help. Sure, you paid that buyer more---say 25-50% more but the resulting efficiency of greater billings per person more than made up for the higher salares.
As regards going back to the old ways---integrating creative and media----the truth is that they were never integrated and operated in splendid isolation, with creative totally in command. I'm sorry to say this but were we to return to the old "full service" agency model, media would once again become a stepchild to creative and agency prifitability would probably decline.