Major media stalwarts – owners, agencies and clients – gathered last night in Woodmead, Johannesburg, to discuss the ominous, yet pertinent issue of where the future lies for the industry as change rips through traditional business models.
Organised by Wag the Dog Publishers in association with the Advertising Media Forum (AMF) and the Advertising Media Association of South Africa (AMASA), the event in the shape of a panel discussion, was attended by over 250 people, clearly hankering for answers to the burning questions hanging over the industry’s head.
Eminent panellists – Michelle Anderson (Procurement -SAB Miller), Linda Gibson (Ads24), Enver Groenewald (Avusa), Harry Herber (The Media Shop), Brenda Koornneef (Tiger Brands), Peter McKenzie (Oracle Airtime Sales), Michelle Meyjes (MEC Global), Clare O’Neil (SABC non-executive board member), Lauren Stevens (SAB Miller) and Gordon Muller (MC for the night and owner of GSM Quadrant) – represented all facets of the media coin: client, media owner and media agency and debated the salient issues facing the media sector and the agency model in particular.
To put it into context, direct deals, media commissions dropping to as low as 0,5%, rising costs and a talent gap, is coupled in many instances with international pressure on local off-shoots to hoof up profits, suggesting that the future of the media agency is threatened.
Sandra Gordon, owner of Wag the Dog Publishers, stressed that media agencies’ financial models are constantly under strain. “This has happened since separating from their creative cousins over two decades ago. The decision by some to enter the discounting game is starting to backfire. A reduction in agency commission in order to attract new business has resulted in a devaluation of their own currency.
“This is exacerbated by a failure to negotiate realistic retainer fees with clients. Resultantly their ability to retain the necessary intellectual know-how to deliver a service comes into question.”
The media owners represented on the panel grappled with the idea that within three years, over 50% of their income would be placed by clients and that in a desperate move to survive, some agencies would look to media owners to assist them in boosting their revenue through volume-based deals.
“Media agencies are under financial scrutiny. Undercutting and underpricing has led media agencies to where they are today,” said Harry Herber of the Media Shop, a media agency.
“I do not for one minute think that media agencies will become obsolete, but I do think that some practices, including the massive discounts given to clients, have undermined the media agency… I think rate cards should be gotten rid of.”
Linda Gibson of Ads24, a media owner, echoed Herber’s sentiments, suggesting that instead of reckless discounting, commission structures should be transparently communicated alongside the standard 16,5% rebate system. “Where has the media agency’s share gone? I believe a lot of this is because media agencies have devalued their skills.”
Enver Groenewald of Avusa, another media owner, and Lauren Stevens of SAB Miller, a client, agreed that the devaluation of the media agency’s skills by the media agency itself has severely compromised the industry.
“Clients need to be retrained and made to believe that good quality people… creative and talented people, are looking after their interests. With undermining and undercutting, we forget that great ideas and minds emanate from our media agencies,” said Stevens.
However, Michelle Anderson, representing the procurement side (SAB Miller), said that media agencies need to show what value they are adding to clients. “Often we ask ourselves what financial returns we are getting from media agencies. Everyone is driving costs down, so agencies need to show what skills they bring that the client cannot provide themselves.”
Adding Value – Bringing The Media And Creative Agencies Together Again
Brenda Koornneef of Tiger Brands, a client, asserted that the world is changing and that while there may not be an immediate demise of the traditional media model, agencies have to communicate and collaborate with others to execute goals, especially as consumers want to engage with and experience brands.
“There should be a remarriage of creative and media agencies. It was a sad day when these two split ways.”
Koornneef said that closer collaboration between creative and media agencies also means the development of “through-the-line” creative input. “This is how we get value back.”
Through-the-line advertising should transcend the traditional barriers of above-the-line and below-the-line communication and merges them to achieve the most relevant platform to engage the consumer.
Peter McKenzie of Oracle Airtime Sales, a media owner, lamented the days when creative and media agencies provided a full service. “Now media is more complex with audiences fragmented. More than ever we have to come together. It is no use being part of the discount spiral … We have to fairly remunerate skills and harbour fair expectations to make the model sustainable.”
The main thrust of the evening was change, with the industry looking at ways to evolve sustainably. All concurred that the industry has to be more transparent and show its true worth and value-add.
“There are ways and means because at the end of the day, agencies are the creative force in the workplace,” said Linda Gibson of Ads24.