Intellectuals and Power-Crazed Lunatics: The Future for Media Agencies – Part One

22 August 2013

It is generally acknowledged that the whole field of communications has changed unrecognisably over the last 10 years or so. And that the speed of change has been accelerating. Given this, is it still appropriate that those charged with advising their clients on how best to use communication channels to change behaviour, build brands, sell product are structured pretty well as they always have been?

The next few Cog Blogs will explore the future of media agencies. Have they lived up to their early promise? Are they set to prosper in the future?

Media agencies began life in the 1970’s. The exact year varies by country and anyway doesn’t matter much. Their reason for being (certainly in the UK and it can be argued elsewhere too) was born out of a failure by the old full-service ad agencies to take the subject of media seriously. A group of talented entrepreneurs left the ad agencies, set up on their own and promptly walked off with large chunks of business.

Today, media agencies are somewhat schizophrenic. On the one hand they do genuinely interesting, creative and actionable work that brings the early promise of the media agency being positioned at the centre of all communications activity closer; on the other they behave something like power-crazed lunatics making free with their clients’ budgets.

Something has gone wrong somewhere. Rather than focussing on buying the plan, the buying end of the business now seems to be at least as much about inventing ways of making money for the agency as doing the best for their client. Sometimes these things coincide – but often they don’t.

For those who doubt the full extent of media agencies’ creativity in enhancing their margins, this excellent article, published in Australia a few weeks ago explains it all far better than I could: http://mumbrella.com.au/what-your-media-agency-might-not-be-telling-you-168038

What drives agencies to behave like this? Many in the agency business would say it’s as a direct result of clients cutting ‘official’ fees to the bone. So the agency has to look elsewhere for its revenue. That’s a cop out; agencies, like any provider of any service have to justify the value they deliver. As long as that value is defined in simple price terms then clients will continue to push fees down. If the agencies weren’t prepared to accept that fact then there wouldn’t be so many of them taking part in competitive reviews.

The agencies have a choice. Either they can continue to accept lower fees, and make their money unofficially. Or they can help clients understand the true value they bring, and charge accordingly.

Their future lies in the latter. In Part 2 of this Cog Blog series we explore why.