Divide and Conquer: The Future for Media Agencies - Part Three - Brian Jacobs

The last two blogs in this series on the future for the media agency have looked at the stresses between the public planning led element of the organisation informed by research and data and the more private buying element driven far too often often by a need to make money for the agency as opposed to doing the best for the client This final edition looks into how agencies might organise themselves differently for a brighter futureIn one way media agencies are a little like banks Banks should be able to provide a helpful central even strategic role in their customers39 affairs amp8211 but any reputation they build up in that space tends to be subsumed by the behaviour of a few who invent financial tools of such complexity that noone understands them noone stops them and bingo amp8211 before we know it we39re embroiled in a fullblown financial crisisOne proposed postcrisis solution in the banking sector is to separate the 39good39 in effect retail banking from the 39bad39 the investment divisions Perhaps the same approach might shape the future of media agenciesThe agencies39 problem is circular They need a certain volume to be able to afford the talent and develop the tools necessary to understand and drive their clients39 use of all communication forms But their clients keep seeing them as being primarily in the business of using their volumes to drive media prices down As a part of this downward spiral of prices clients keep putting agency fees under pressure by reducing them by imposing later and later payment terms and so on Agencies thus find themselves looking for income from media owners or other third parties to supplement the lower fees from the client in order to be able to afford the tools and talent that help them win the business in the first placeAnd this is quite apart from having to bolster holding company margins at a time when other elements of the marketing services sector are under the same pressures but generally without the unofficial income getoutClients then find out about these unofficial income streams fire the agency call a review and the whole farrago starts againThe trick for agencies is to separate the buying end of what they do from the planning Reposition themselves as something far closer to management consultants but in the communication space Charge accordingly for the advice they deliver and the plans they writeBuying is hived off into a series of commodity low cost businesses It may well be that there will be clients wanting a pure buying service and paying little for it That39s fine amp8211 the buying group delivers a low quality service for a rock bottom price But all the agency39s efforts and those of the holding company parent goes into selling the highend planning and consultancy serviceThis end of the business delivers advanced communications planning and related research services at a higher price If as will generally be the case the client wishes the planning agency to take the plans through to buys then that39s fine too amp8211 the planning side goes ahead and commissions whichever buying team they like negotiates a price with them and pays them out of the fees received from the client The client relationship remains purely with the planners amp8211 the buying relationship and payment for that element of the service is between planner and buyer The planner holds the buyer responsible for every aspect of the delivery of the planA number of specialist planning organisations will emerge from this model justifying and charging a higher fee for a quality service This has happened before Remember companies like Michaelides and Bednash and Naked To an extent it happens now with smaller agencies In this more complex environment the time is right to reignite this idea across a broader canvassFor many years the media agencies have feared management consultancies trespassing on what they see as their turf This way they go onto the front foot amp8211 they become management consultancies but within the communication space and with all the resources of sister or more distantly related specialists at their disposalThe major agencies will thus be able to take their place at the centre of their holding company39s structures selling such as research and even creative services around their plans The smaller agencies will claim a degree of creative independence absent they will say from the holding companies There will be a place for bothThe future for the media agency will be as the hub in the centre of the communications wheel being paid for the quality of their thinking rather than for their buying muscle The order of events becomes work out who you want to talk to and where and when you want to talk to them Only then work out what you want to say to them And then buy them In this world the media agency becomes a true strategic advisor helping brief allocate budgets to and evaluate all aspects of the programmeMedia buying and all that goes with it becomes separated with any financial relationship between buyer and client removed The heat is taken out of the situation with the media agency planning team responsible for the delivery of the plan The rule becomes 39buy to plan not to budget39 Deliver what39s asked for what39s required Then stop and reinvest the money into such as research or data analytics Don39t just spend to budgetThis is how the future might look To do nothing except to continue to add specialists make money unofficially and to be subject to a lack of trust from their customers is to condemn the media agencies to a circular form of hell being paid less and less for doing more and moreLater this week we will summarise these three blogs on the future for media agencies amp8211 and ask quotAre they up to changingquotBrian Jacobs spent over 35 years in advertising media and research agencies including spells at Leo Burnett UK EMEA International Media Director Carat International Managing Director Universal McCann EMEA Director and Millward Brown EVP Global Media He has worked in the UK EMEA and globally out of the USA His experience covers shifts from fullservice ad agencies to media agencies from traditional singlecommercialchannel TV to multifaceted digital channels and from media planning to multidisciplinary communication planning Brian can be reached at brianbjandacom Read all Brian Jacobs39 MediaBizBloggers commentaries at Brian Jacobs amp160Check us out on Facebook at MediaBizBloggerscomFollow our Twitter updates MediaBizBloggerThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaBizBloggerscom management or associated bloggers MediaBizBloggers is an open thought leadership platform and readers may share their comments and opinions in response to all commentariesImage courtesy of cooldesignFreeDigitalPhotosnet

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