Global Agency Media Deals: Trust Us Because We Are Big (And Thus Biased)

You may have read that Omnicom Media Group announced a big deal last week with iHeartMedia (formerly known as Clear Channel Communications) worth $200 million per year. Omnicom also signed a deal with Twitter worth $230 million per year in May, as well as an Instagram deal worth up to $100 million.

Don’t think other agency groups have been quiet on the big-deal, big-money front. In 2013, WPP and Twitter closed a substantial “multimillion” agreement, as did Starcom MediaVest (SMV). SMV’s parent, Publicis Groupe, also announced a multi-year, multimillion arrangement with Facebook earlier this year, as well as a $100 million Google Upfront deal in late 2013.

If I wasn’t so lazy, I could have probably found even more deals, since this is just a sampling of what turned up from a simple Google search.

So what are the benefits of these deals for clients of the respective agency groups? Well, if you believe the glowing joint press releases, the agencies get access to bespoke research, unique data directly from the fire hose, new and exclusive ad formats and all sorts of other goodies only they will be able to pass on to their clients.

But how many unique ad formats can Google, Twitter, Facebook/Instagram and all the others really create and deliver for each of the agency groups? Let’s not forget that within each group there are a multitude of “distinct” media agency brands that each tap into the multimillion-deal goodie bag.

I have not noticed any significant changes to my newsfeeds, sponsored tweets and other assorted paid-for ads, posts and content. I have also not noticed any significant improvement in how I am being targeted by any advertisers (this is a wholly unscientific statement based on n=1 observation).

We have to wonder, then, what happened to all that exclusive stuff in formats or data. And what other reason there might be for the global agency groups to pursue these type of deals?

The answer is, of course, “money.” One use of the money argument is when agencies pitch. It used to be enough to be able to claim you were the biggest buyer of medium XYZ, but in today’s hyper competitive world these deals signify that you are big and important enough to be able to pull off a multi-faceted deal with some of the most valuable companies in the world.

The other cost benefit of the volume discount might be less transparent — literally. Because I cannot for the life of me accept that there is no financial incentive for the agency groups that sign these kind of deals. Advertisers may indeed benefit from better (read: lower) unit cost. And all agencies always pass on all savings to their respective clients in a fully transparent manner, right?

And let’s be clear: These deals are commitments. Don’t think for one moment that the agency group CFO won’t pressure the agency heads to ensure these commitments are being met. Meaning that the impartially crafted connection plan based on the advertiser’s brief might just be a tad biased towards the big deals. In other words: if your agency of record is part of the Omnicom Group, expect a lot of iHeartMedia, Twitter and Instagram in their recommendations.

By Maarten Albarda
Maarten has lived in five countries across three continents and honed his integrated marketing communication skills at JWT, Leo Burnett, McCann-Erickson, The Coca-Cola Company and AB-InBev. He now runs his own integrated marketing consultancy in partnership with Flock Associates, and has written the book “Z.E.R.O.” with Joseph Jaffe.
Courtesy of mediapost