The conversations of media service brands coming out of the back office to be a full-fledged P&L, which is on top of the communication exercise today, may be as recent as a decade and a half ago, but in the times when things change fast, a decade is ancient history. Media service brands breaking away from the full-service agency model to be a business in their own right, is a conversation of the past; them playing a strong role (in many cases the lead role) in the communication exercise is the present. But what is the future?
More importantly, who is responsible for making that future happen?
Media service brands’ business structure has come under the scanner on various platforms. Only last year, it was discussed extensively at the exchange4media Conclave 2009. Mindshare rebooting its model or the formation of Mediabrands at IPG gave the indication that media service brands are paying serious attention to change. This discussion (read heated debate) came up informally on the sidelines of the Festival of Media (FOM) two weeks back during a tea break, and the question asked was – these efforts are fine, but do they impact the business structure of these media agencies?
That got some of us ‘pro-media service brands’ people thinking, though that didn’t deter us from stating vehemently, ‘Of course it did – that was the whole point!’ and God bless the dear FOM representative who had rung the bell and was ushering everyone inside the seminar rooms again, breaking our little debate mid-way. Some of us, like me, kept thinking (this is also because I am extremely slow in understanding business models). But I am quick in asking questions, and so I was asking myself, hang on – why should business models and their restructuring be the whole point? Shouldn’t the focus first be on the product?
The answer came in the very next session - Kester Fielding, Global Media Procurement Director, Diageo, was speaking, and he pointed out at the agency commission model. Now that, I knew. Commission models linked to client ad spends are a weird place to be in – the agency makes more money if the client spends more. If the system incentivises higher spend, why would an agency cut that down? The smarter ones make the argument that they get more done in the same budgets, but then, thank you for strangling the media owners! It is a vicious cycle of finger-pointing from there, finally putting the ‘blame’ back on clients for asking for lesser rates and setting the advertising industry back, than growing it.
It is, in fact, the business structure of media service brands that needs a revisit to ensure a better product, and not the other way round. The fee-model that many had begun to follow a few years’ back, looked like an answer. But when the incentive is only to retain the business, not all agencies are as excited. True, that for clients, one bad relation leads to a pitch in a near similar manner as a good relation does, and for agencies, that means one client’s exit and the possibility of another one coming in. While all of this sounds like business as usual, it is business minus the motivation for an industry to grow.
Fielding had made three observations about media service brands globally – that the perception around them had not changed, that their business structure had not evolved, and that they were having the same conversations today that they did a decade ago. I am sure media service brands are sitting up, deliberating and hopefully, also worrying – at least those who wish for the industry to grow.
There was one thing Fielding had advised – media agencies should be able to talk and work together with each other to convince the client that they were indeed thinking from the client and industry viewpoint. One almost sees that happening when people such as Dominic Proctor (Mindshare Global CEO), Mainardo de Nardis (OMD Global CEO), Jack Klues (Managing Partner, ViVaki), earlier Nick Brien, who had put Mediabrands in place, and others converse with each other.
It reminds one of when media service brands were finding their first footing – global leaders learnt from each other and a new power in the form of media service was born. How do leaders today set competition with each other aside, and instead, once again learn from each other to grow this power, to not lose its footing and most importantly, to be able to lead the communication exercise bringing all parts of communication to the client than the client seeking them out individually.
The business structure needs to change and the onus is more on media agencies than on clients. Mike Cooper, Global CEO, PHD, had said that if print died, media agencies would find another way of engaging with the consumer. If media service brands lost ground, clients would find another service to lead communication. Kester Fielding’s view on media service brands is a concern...
Now without sounding ‘pluggy’, these are some of the concerns that would be tabled at the exchange4media Conclave 2010 on June 9 in New Delhi and June 11 in Mumbai. Since this is not plugging exchange4media Conclave 2010, I’ll just end with ‘watch out for more information on the Conclave on our website’ – media service brands have traditionally been at the centre of the Conclave, and this year is our strongest yet. Obviously, this is a subject we love talking about...
Media agencies are having the same conversations they did 10 years back: Kester Fielding, Diageo