Media ACE 2018: Power panel discusses pricing, pitches and strategy
Industry experts come together to discuss a topic that requires that addressability - 'Strategy versus pricing' : What is the future of the media pitches?
That pricing remains the biggest factor that dominates media pitches is not unknown. However, can price be the sole factor at play?
So when the likes of Shashi Sinha, Chief Executive Officer, IPG Mediabrands; Raj Nayak, Chief Operating Office, Viacom18; Ajay Kakar, Chief Marketing Officer, Aditya Birla Capital; Ashish Sehgal, Chief Operating Officer, ZEE5; Ashish Bhasin, CEO, Chairman & CEO - South Asia, Dentsu Aegis Network; and Vikram Sakhuja, Group CEO, Madison Media; came together at the fourth edition of Media ACE Awards 2018, it was only fitting to discuss a topic that requires that addressability- Strategy versus pricing: What is the future of the media pitches?
The panel was moderated by Paritosh Joshi, Principal Provocateur Advisory. Joshi opened the discussion talking about how some years back, durability of relationships in the client-agency business was a big deal.
Talking on the topic, Sakhuja opined that between strategy and price, strategy is hygiene and price is the determining factor on the basis of which the decision to give business to an agency is taken.
“Somewhere along the line, we’re still known as media buyers. We’re not known as marketing investment managers. We got to agree on outcomes that media can deliver. And we have to ask them, is top-line better or bottom-line? Those conversations aren’t happening,” he said.
According to Nayak, the bone of contention today is that agencies are not making money. “They are going out and pitching to clients saying that we will get you at 20 per cent lower price than what you were getting earlier. And if you’re saying 20 per cent discount, broadcasters will have to give their spots at zero value. Audit agencies are telling clients to put pressure on the agency and shift the agency if they can’t give another 30 per cent. How are we accepting this mandate from clients? Why are you going and promising it?” he continued.
A candid Nayak said, “I know of agencies who are returning money to their clients. You’re not only killing your business but also the broadcaster’s business."
When Joshi raised the question as to why don’t partnerships endure anymore, Kakar spoke about how people have become more demanding, less accepting and more promiscuous.
Kakar pointed out that the problem lies on both sides.
“I remember growing up and seeing the cokes of the world as the most loyal client partnerships. And at Cannes, I’ve heard the Coke CMO saying that I’m happy to give projects to anyone and everyone. And it’s like, who starts delivering first? The agency side will say you don’t pay me enough while the client will say I don’t get enough. So both have to accept what is it that you’re paying for and what is it that you’re asking for? If you decide what the media agency delivers, I think promiscuity may not be as prevalent as it is today.”
Kakar made a point about how the service industry is unfamiliar with the tasks that the client is up against.
Kakar said, “If I wear the client hat, there are three things: my top-line, my bottom-line and my number of valued customers. None of the partners are happy to own my KRAs. We all come with what we have to offer and not what the client needs.”
Continuing on the particular line of reasoning, Sehgal stated that it is a demand-supply situation. “Ultimately, it is my product that I’m selling. If I don’t agree, they both fail. As a broadcaster, we’re also at fault by fuelling that fire. There are certain circumstances where some of us might have opted for it. The communication business itself has fragmented so much that everybody is yearning for that last rupee. In that anxiety, we sometimes go for the discount bit.”
Joining the discussion, Sinha said he is all praises about IBF’s guidelines of refraining from giving discounts.
“There are many cheques and balances, global pitches and global clients, so how do you do it? But the level to which it is dropped, without calling for collective action, we won’t be able to take it on. I think six months down the line, we’ll be in a better position to revolt this,” he said.
For Bhasin, every client and agency gets what they deserve. He says that there are many legacy players who are caught in very old-fashioned way of thinking and that part of the business is clearly under pressure.
“The only way I as an agency can earn more is by showing more value to my client than what he is willing to pay. What else can we bring to the party?” he advised.
Sakhuja highlighted ways of measuring responses in digital properties. However, he was quick to add that it requires evolved people from both the client and ad agency side. “Now with digital coming in, you can do a lot of stuff that leads to ‘outcomes’ as I call it. There are couple of clients where we are sole sales channel or comprise 50% of the channels where they get sales. These clients don’t bother us with price because we’re delivering sales. Awareness is another aspect of it. If I can go and tell people that I have delivered a plan where people actually spend time on your ad, that also is a business outcome for a brand to be achieved. I don’t think there are many people from the client’s side to have this conversation.”
Kakar asserted that the client is going to continue to ask for lower pricing/ cost-cutting as long as you continue to offer. “Strategy is something intangible and it doesn’t resonate to a businessman who is thinking numbers. But when you talk about cost and saving, its music to any businessman's ears. Kakar called out agencies for earning wrongly.
“When you had a pitch that somebody won. And it's at 0 per cent commission, what is the message you’re taking to the client? If you’re earning from that 0 per cent also, you’re earning from somewhere right?”
Sehgal and Nayak asserted that they have been saying no consistently to clients on offering lower prices than what they’re operating at.
As the conversation heated up, Sehgal declared, “I’m saying no at this forum itself. Any client that pitch from now onwards, I’m not going to reduce my price than what I’m operating at today. Even if it means loss in business. If they want to come and have a negotiation, they can come and have a negotiation on how to improve their viewership on my channel."
The ability to say no was the soundest prescription by the panel. “Unfairness in pricing needs to go away and it has to be pegged at a certain level,” said Bhasin with an air of finality.
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