Given that I and tens of thousands of my closest business friends are invading Las Vegas this week for CES, it's only appropriate that this first blog of 2010 focus on a winning streak—the extraordinary rags-to-riches story of the media agencies in the past decade.
As impressive as this story is, it could still end badly, even tragically, if media agencies don't push back against a trend that threatens all their hard-won gains.
And yes, I'm talking about money.
Sure, there were media agencies before 2000 and they had their moments, even before unbundling made media services a profit center. In fact my old agency, Western International Media, was founded by a visionary and my mentor, Dennis Holt, who even 40 years ago maintained that his agency "Doesn't do bids. We do relationships."
But in general, media was as it's portrayed in Mad Men: a nerdy guy with glasses and a bowtie huddled in a corner. Certainly most of the attention and acclaim went to creative and creative directors.
Then digital technology changed the game. Unbundling may have begun as a response to fragmentation, designed to aggregate clout, but very quickly it became crystal clear that this new world needed media brains—and that media brawn needed to be applied with intelligence.
Now media agencies call the shots in branded entertainment, consumer insights and many other areas of communications thought leadership. And it is in the media agency sector that one finds the visionaries, risk takers, and innovators.
But a new deck has been cut and there's a new dealer behind the table. And you know what that does to winning streaks.
Procurement rules reviews around the globe. Recession-sharpened long knives are out everywhere. Over and over again, my media agency friends and colleagues find themselves in bidding wars rather than competitions to find the best thinking and most effective solutions. Some of the largest media pitches now are won almost exclusively on price—based on guarantees that may not, in some cases almost certainly will not, be met.
Media agencies risk losing the vaunted position they fought so hard and long to secure and, of course, the financial pain of giving away business. Clients need to be extra careful when they put their businesses in play, because they don't want to have to change agencies again if guarantees aren't met. Churn is never cost-effective.
And of course there's also the cost to clients and agencies of running a pitch, the costs associated with transitioning from one agency to another, or the cost of damaging long term relationships with talent, institutions and vendors.
Nobody wins in a numbers game if it leads to overpromising and underdelivering.
Media shops and clients alike need to rethink this troubling trend. Media agencies' value to their clients is not just quantitative, but qualitative as well. And on the quantitative side, common sense needs to rule.
Otherwise, it's not a marketplace. It's just a bazaar, reducing all sellers to the worst common denominator and bringing new meaning to the concept of "buyers beware."
And you don't have to be in Vegas to know that in the long run, that's a losing hand.
Michael E. Kassan is Chairman and CEO of Media Link, LLC, a leading Los Angeles and New York City-based advisory and business development firm that provides critical counsel and direction on issues of marketing, advertising, media, entertainment and digital technology. Michael can be reached at email@example.com
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