The Future for Media Agencies

Last month Sir Martin Sorrell (SMS) was at DMexco being interviewed by Ralph Simon, the CEO of the mobile consultancy business Mobilium.

Here’s what SMS had to say about the future of media agencies:

“My view is that the media planning and buying organisations that we see in the six agency holding companies probably employ about 200,000-250,000 people. They will not all be employed there …. even in two years’ time.”

Sorrell was the pioneer of media agency mini-holding groups, in his case GroupM, whose original reason for being was volume and volume deals.

I have an SMS quote from 15 years ago, when he opined that media agencies were entering a new era of ‘brain, not just brawn’. It’s been a while coming, the lure of high margins was just too great, but better late than never.

Media agencies grew up as buyers first and foremost. Clients referred to them as media buying agencies – many still do.

Planning was an after-thought, the front-of-house people designed to get you in the door. Once safely inside you were escorted to the smoke-filled, windowless room at the back where the deals were done. Truth is, you came for the deals, and everyone knew it.

Times change, today the opportunity is all about understanding audiences and turning that understanding, those insights into practical actions.

Buying the right thing beats taking on any old cheap tat.

Or it should do. There are still some dinosaurs around the industry, talking of share deals, cheap CPM’s, optimising clicks, using words like ‘views’ and ‘viewability’, ‘attention’ and ‘attribution’ without really knowing what they mean.

It’s an understandable confusion; if you ask 10 agencies for their definition of (let’s pick one at random) ‘attention’ you’ll get at least 15 different answers.

We don’t know what we mean ourselves, so why should our clients?

What we’re seeing today is the painful (re)birth of the planning era, an era defined by insights and creativity, not audits and CPM’s. The dinosaurs will die out, or at least retire comfortably, still raging against the platforms, and advertiser research initiatives whilst their ex-employers’ revenues drift away.

Their old allies the buying agencies are of little use. They have been hollowed out. A combination of a lack of trust, the giant platforms going direct to their advertisers, and a lack of real training in creativity as opposed to media technology has done this to them.

They’re understaffed, their margins aren’t what they were in the golden era before some busybodies and know-it-alls invented transparency and the large groups are in ‘deal hock’ to the major vendors.

They have little to say, few opinions about the issues of the day for fear of upsetting some corporate applecart somewhere.

They’re fast in danger of becoming irrelevant.

But there is hope.

Advertisers need help with navigation. There has never been a more complicated media scene and we’ve never had more data to help in the navigation. Data that can be insightful, or highly misleading.

Advertisers know this. Last week’s WFA and MediaSense research indicates that 24% say their media agency model is ‘unfit for their future needs’. Just half that number (11%) say their agency does meet their future needs.

The best agencies are full of bright people who between them combine the creative with the technological.

The rest are full of people terrified of making a mistake, whose horizons are defined not by doing the best for their clients but by keeping their superiors’ deals in line.

The best love the challenge of working with ambitious, risk-taking clients.

The rest settle for an easy life and simple solutions.

The best embrace accountability and search for innovation in modelling effect.

The rest look to control and bend results to their end-benefit regardless of validation or accuracy.

The best form a close bond with their clients and have no difficulty arguing for and justifying higher fees.

The rest cut client fees to win the business and moan about it for evermore, whilst finding ways to top up their revenue from suppliers.

The best create innovative plans, and find a way to execute.

The rest subcontract ‘planning’ (more accurately, allocation) to vendors, and post-rationalise what they’re fed back.

The best will survive and thrive; the rest will be replaced by machines and algorithms.

There’s certainly a bright future, as long as the agencies replace the rest with the best.

The ball is with them.

Posted at MediaVillage through the Thought Leadership self-publishing platform.

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The opinions expressed here are the author's views and do not necessarily represent the views of MediaVillage.org/MyersBizNet.