Media agencies are facing a difficult time at the moment. The fact is we are stuck firmly between the need to satisfy procurement through value improvement and reduction in servicing fee matched against a wage bill that is spiralling out of control. Celia Collins and Quinton Jones take a look at the state of the media (agency).
In recent years we have said media agencies would need to adapt quickly to survive. Sadly it seems the scenario just keeps getting worse and no one is standing up and putting a peg in the ground. We all have our opinions yet nothing ever changes.
Procurement departments keep saying “we” (media agencies) need to show “economies of scale” by being “innovative” and training our youngsters in the industry i.e. reduce fees and do more work. Remuneration is on a quick race to the bottom, with procurement satisfied that each new appointment is an improvement in ROI – pay agencies less and get the same or more.
Additionally most profit margins are put at risk (for a performance bonus) to show clients that we as media agencies are able to deliver. The true fact is – are we really able to continue delivery at this level?
Most clients have an appetite for about one innovation/ad hoc piece of work a year, on average. Yet to prove ourselves we show clients multiple innovation pieces a year. Often due to the cost of innovation – procurement would say no anyway! A blind focus on price guarantees slowly strangles innovation. Still we do not define innovation with our clients and their procurement departments. It could be a variety of options but we only see it within the media platforms. So who is really to blame for this?
The second half of the equation that is crippling the media business is the salary bill. To be really blunt most media strategists, if they are good, are very often earning a small fortune by the time they hit the age 30. Often these salaries compare very favourably to what top professionals in other industries earn. It is not uncommon to see strategists competing with lawyers, engineers and doctors at the same age. It’s the simple law of supply and demand. Good people are worth more than not-so-good people and at the moment, unfortunately, there are few good people to go around. Job hopping has become almost an accepted practice, with many people changing agency on average every two years. Salaries are repeatedly hiked and agencies reluctantly capitulate as they need people to do the work.
Constant change has also brought about a fragmentation of skills. Media staff are often not spending enough time in one environment to be mentored and develop properly. The net result is you end up with individuals who, within a short space of time, have amassed a list as long as their arm of clients they have worked on, but actually have little solid experience to offer, often making them one dimensional in terms of capabilities.
Agencies are all training young talent through the industry schools and through their own intern programmes, which is fantastic, but in all honesty it will take our young talent at least three to four years to be able to hold their own in front of a client and talk with confidence. We are often forced to promote them for “economies of scale” and come in on procurement requirements, and ultimately remain profitable. So we put these youngsters in front of our clients, and hope they deliver. More often than not we get the call – “we require more senior people on our account with more experience” and in order to keep the clients we oblige. Agency loses and blames clients. Savings are made in other areas – revenue is squeezed.
Two things would help the current state of the industry greatly.
– The value discussion. Media agencies and clients coming to the realisation that cheaper is not always better and the old adage “you get what you pay for” is very true in this case. Change the conversation to one around value delivery versus fee and not just fee reduction. The move to resource based models is a positive and at least addresses the real cost of servicing.
– Invest in talent. This is the job of everyone in the industry and possibly the most critical factor in the long-term success of the industry. We need new people in media. We need people who are in media to stay in media, and not use it as a stepping stone to related fields. We need to ensure that these people are retained in media, mentored and develop into the media industry leaders of tomorrow.
The media agency of the future is going to have to reinvent its self, clients are not going to change and neither are our global partners. It is up to us as South African/African agencies to define what we look like in the future and how we operate. The African agency of the future is going to look drastically different to what we know it today. We need to manage our own destiny but more often than not it is easier to blame and talk about it than take relevant action.
Celia Collins is managing director of Carat Johannesburg and Quinton Jones is managing director of Carat South Africa.
