Media agencies are in a catch-22 situation with no easy way forward. Managing director of Universal McCann, Bruce Willamson, explains in a story first published in The Media magazine.
In the words of that REM song, ‘it is the end of the world as we know it’ for traditional specialist media agencies. Three words beginning with ‘P’ are aggressively coming to the fore as most essential in the modern media agency. They are: procurement, pitches and personnel. Perhaps they have been there all along…
Let’s get one thing straight, media is not glamorous, in fact there is only one prestigious accolade that recognises innovation in media, the Roger Garlick Awards. And even this event is overshadowed by creative people being heralded for their fantastic creative genius. These awards, to quote from the AMASA website were “conceived in 1999 to recognise outstanding performance in the area of media strategy”, and the awards are evaluated on “communication goals reached, media strategy, creative execution, integrated/harmonised effect and overall value for money economy”.
Are they actually being evaluated on all these criteria? It seems as though only one of those criteria appears to be taken into account: that being “creative execution”. Should the point here not be about achieving campaign objectives and actually seeing the return on investment for the advertiser? Even though I have won a Roger Garlick Award, I believe more attention needs to focus on the media strategy.
The media agency is an organisation driven by numbers, costs, reach, frequency and research. This brings us back to the three ‘P’s. Many advertisers, especially bigger corporates, have or are in the process of, incorporating procurement departments. Do procurement partners rule the roost when it comes to delivering media objectives? Why quibble over half a percentage in fees, when more money can be saved by incentivising agencies to do better on deals for their clients?
Negotiating better discounts than an agreed upon benchmark and being more efficient by utilising specialist agency tools is where any agency worth their salt excels and adds value as a partner to clients, and this is where clients can save much more than the half percentage point in fees.
There is always a push for cheaper advertising costs, whether it be for agency fees, or even being benchmarked in what an agency is able to negotiate with media owners. There has to be a limit as to how far an agency can be pushed, and when this limit is reached, the advertiser will promptly put the account out to pitch. It is a Catch-22 situation.
During a re-pitch, the incumbent agency is assessed on actual value delivered versus promises made in the pitch process by competing agencies. Again, this process can spiral out of control as costs and not strategy, become the deciding factor. Agencies run the risk of undervaluing their services to the extent of not being profitable.
As the profit margin narrows, staffing costs soar. There is still a shortage of qualified staff in the media industry. Agencies struggle to fill posts, and often have to resort to expensive freelancers or green graduates. While there is nothing wrong with employing graduates, one still has to include the cost of training them. To become a ‘qualified’ planner can take anything from three to five years, and in the meantime, added pressure is placed on the shoulders of already over-extended existing staff.
The current system is not sustainable. We are the media specialists. While competition is always good for our respective clients, the bottom line should not be the deciding factor. Clients pay for other specialised services, and unique agency tools have a premium attached. Some clients understand the benefit of these tools and the long-lasting additional value that they create.
Bruce Williamson is the managing director at UM South Africa, a media independent with services that include traditional and digital media strategy, planning, and buying.