Xaxis, Accuen and their Friends in the Agencies
20 August 2014
We all learn. In my case one key learning from over a year of blog posts is: ‘Put Xaxis in the title and watch the audience numbers soar.’ It is tempting to do what I was going to do this week (a piece about the JICs) and simply put Xaxis in the title (‘Xaxis vastly improves joint industry studies’?); but there’s no need for such trickery. Last week’s post in which I was a wee bit positive has generated some response, so this week I feel I need to expand on ‘wee bit’.
Media agencies are curiously schizophrenic organisations. On the one hand, they see themselves as competing in the same management consultancy space as McKinsey (note to agencies reading this: no-one else sees you like this; it’s a self-delusional thing); on the other they feel the need to come over all coy when it comes to how they make money.
McKinsey and the rest see no need for such coyness. They charge a huge fee for giving advice. Clients pay it as they feel they receive value for money. End of story.
There’s a lesson here for the agencies. On the one hand they tell each other (over and over again, ad infinitum) how much value they add to the client’s business. They tell other people too – like the trade press, media owners, technology partners and conference organisers – but oddly by their own admission (‘clients won’t pay for planning’) they have failed to make the case successfully to the only people who matter: the clients.
If the advice they give, and the service they provide is genuinely so useful (as I honestly believe it can be), how come no-one really wants to pay for it?
Is it all bound up with new payment models, like payment by results? Results-based payments have been around for years, they can and often do work very well; but they don’t suit every circumstance.
I can’t help feeling that one reason why clients don’t pay agencies for the contribution they’re more than capable of making to business success is because they think the agency is getting paid plenty already, if not directly by them.
Whereas this all used to be a bit ‘nudge, nudge, wink, wink’, unofficial agency income and how the system works has become common knowledge, partly because there are so many ex-agency people knocking around the system these days (several of them at large clients). Even the trades write about agency deals and kick-backs, about the lack of transparency, and how trading desks are in large part there to deliver revenue to the parent without the client knowing about it. None of this is in any way secret any more.
Last week I said that Xaxis was introducing a degree of flexibility to their model. I praised them for this; and I meant it. But Xaxis still buys from itself (or from its sibling 24/7); it is still opaque in its trading practices. It still brokers digital space.
Xaxis is at least being clear, or clear-ish. What news of Accuen, the Omnicom version? Some mystery surrounds this. Even Google, which turns up 373,000 results for Accuen knows comparatively little (Xaxis generates over 5 million results). Even the mighty Cog Blog has failed to date, having been fobbed off by Accuen, and having had requests for an explanatory call refused despite the active help of Omnicom Media Group.
All we know about Accuen is that they are programmatic experts; and they run an arbitrage model, according to Omnicom’s CFO Randall Weisenburger speaking to analysts (and AdAge) a couple of weeks ago. Even though as recently as March Annalect’s CEO (Annalect is Accuen’s parent – do keep up!) said they didn’t.
The point is that the workings of many of these trading desks are still something of a mystery. It’s almost as if the others are happy to sit back and let Xaxis cop the flack.
Meanwhile their agency partners (I would agree with GroupM’s Rob Norman and say agency leaders), the Starcoms, OMDs, MediaComs, Carats, Havas and the rest continue what has been (it has to be said) a highly effective campaign to position themselves as business partners to their clients; at the exact same moment that many of their traders are behaving in a distinctly un-partner-like fashion.
If agencies were serious about business partnerships and about being paid accordingly they would come clean about the unofficial or non-transparent income they make. They would sit down with their clients, put all their cards on the table, have a grown up, partner-like conversation and reset the remuneration discussion.
They might well be doing this of course. I hope so.