Media Agencies Aren’t Going Away — But Being ‘Agents’ Might

The business of media has changed so much over the past few years that the notion of media agencies being “agents” of advertisers may no longer apply. That’s the message that Irwin Gotlieb, CEO of WPP’s Group M and arguably the dean of the global media industry, delivered to a room full of advertising executives at the ANA’s Financial Management Conference in Phoenix this week.

It’s not the first time Gotlieb has broached this topic recently. At the 4A’s conference in Austin a few weeks ago, he delivered the same message, pointing to the evolution of clients’ expectations and demands over the years and the strain it puts on the classic definition of an “agent.” “As soon as clients began to nudge us into guaranteeing performance, into putting our remuneration at risk in return for performance criteria … I think many of us ceased to function as agents do,” he told a Beet.TV interviewer.

The context for Gotlieb’s Phoenix ANA address was the current swirl of allegations of undisclosed agency rebates. He isn’t alone in calling for a reevaluation of how clients and advertisers work together. Media legends Steve Grubbs and Mike Drexler each made the same point directly and quite eloquently in published opinions in recent days. And, late last week, the ANA and the 4A’s announced the creation of a cross-industry “transparency” task force to address the issue.

I applaud the industrywide focus on transparency, and the recognition that the dialogue needs to get into foundational issues, not just the controversy at hand. In fact, I’m hoping that the industry uses this moment to look at an underlying macro issue that is at least partly to blame for many of the problems we’re facing today.

Now is the time to for brands, sellers and partner agencies and suppliers to stop managing advertising and media as a cost center. They should instead treat it like the predictable, accountable profit center that it is — and can be even more in the digital, data-driven advertising and marketing world unfolding before us.

Cost-center thinking, where media and advertising investments are treated little differently than procurable, disposable commodities like pencils, toilet paper and heating oil, has failed the industry. We need to restructure goals, strategies, processes and relationships to truly start managing advertising and media as a measurable, predictable and optimizable sales and profit driver.

This goal might not have been possible even a decade ago, but now all media and advertising is becoming digital, or at least digitally measurable. Advertising’s impact on sales – whether short-term or long-term – can now be predicted and proven with high degrees of precision.

If we get in front of this macro issue, we might be able to eliminate the kind of internal conflicts that we live with today, where agencies might be expected to execute designated tasks neutrally, but be compensated not on the performance of the task, but how the task performed — much like a stockbroker being contracted to buy a particular stock, but only paid if the stock’s price rises. Instead, we might see transparent models where task work is compensated fairly for what it is, and performance work is compensated on results, and the presence or absence of other economic incentives or restrictions is explicitly made part of the partnership deal.

I don’t want to diminish the importance of clearing the air and fully understanding the implications of some of the creative business models being practiced today. As a supplier of media and technology to today’s market, I want to insure the playing field is returned to level.

These days, a supplier’s failure to appear as a member of an agency-led pool or consortia, or on a list of preferred vendors, is frequently much more about its unwillingness to participate in non-disclosable compensation models than the suitability, value and performant capacity of its media or technology. Clarity, transparency and alignment of interests will go a long way to removing perverse incentives that might otherwise influence media and technology decisions.

What do you think? Are the days when media agencies were “agents” over? Do you think this is a good time for the industry to reevaluate the whole way we think of and conduct our business?

By Dave Morgan
Dave Morgan is the CEO of Simulmedia. Previously, he founded and ran both TACODA and Real Media.
Courtesy of mediapost