MEDIA COUNCIL Laying their cards on the table:
WRITER Pip Brooking
ILLUSTRATIONS Warwick Kay
» ‘TOPIC‘
Difficult times have prompted difficult relationships between clients and agencies. Media owners undoubtedly get squeezed as a result. Four key players discuss what that means for them, and whether it is possible to effectively rise above it
Deflation, accountability and procurement are now the order of the day. These dynamics have brought client-agency relationships into sharp focus, with the almost tacit understanding that media owners will jump when the other parts of the food chain say so. But how much pressure are media owners feeling? I (PB) caught up with International
Herald Tribune’s Patrick Falconer (PF), Andrew Grieve (AG) from Travel Channel International, BBC World News’ Sean O’Hara (SH), and Forbes’ Charles Yardley (CY) to find out.
PB: So, how are agencies treating you? PF: Agencies come in to see us and explain that they’re choosing partners, but it’s very hard to get them to say what they want. We probably already know, but we don’t want to go there – and it’s incredibly difficult. When you’re operating on a pan-
Formoremedia owner opinion go to
mandmglobal.com
20 M&MQ2 2010
regional basis, agency deals become even harder because there is a huge range of clients and there are so many caveats. By the time you get to the end of the year it falls down under the pressure of it all and you then have to renegotiate for the next year. As media owners, I don’t think we’re haggling on price any more. If you come up with that one big idea, the agency is always going to buy it. Where prices are squeezed is where we’ve invested more and more money into our creative groups and into research. The cost of acquisition for us is much higher than it ever used to be. SH: Unless there’s significant strategic advantage – a new territory or a new category, or an organisation you’re struggling to connect with – you have
to ask clients to invest. We can’t bear all the cost. AG: I worked in outdoor a few years ago and there the outdoor specialists wanted to keep rates up, still valued the time you gave and didn’t want to undermine the medium. There was respect. Compare that with a GroupM. They win an account, commit to a price and then screw themselves over, hence they pass it all on to us. SH: My problem with the conversation about pricing is that you start to see conversations about value coming from a different part of the media buying process to the conversation about cost. It might well be the client you speak to about value, then you speak to the agency about price. They shouldn’t be mutually exclusive.
PB: When agencies come in last minute does ‘value’ become more ‘value add’? PF: Sometimes it’s like that. But when we do business now it’s never about what we charge – luxury clients pay top dollar because they’ve got to get the best position – but all the sectors know what stacks up and what we’re all charging. It comes back to the fact that it’s not
so much about money any more. Ten years ago it was all about “if you can give me this rate and stack up on research”. Now it’s ideas-based. CY: Conceptual ideas sold in at a client level is where we’re generating a lot more success, rather than relying on when the agency decides to push their big idea forward. AG: I’ve only been in international in the past year and what’s really struck me is the importance of client contact.
Because we haven’t got a huge brand – although we’re bigger than a lot of people think – from an agency point of view it’s difficult for us to get to the table. They pick off the big players, which is frustrating, and it means that I will go and see the clients direct. Then there are no annual deals in the way, no hidden agendas, and I’m talking to someone who wants to get their message out there. PF: The problem remains that we don’t get involved early enough in the planning cycle. SH: If you take a business rather than a marketing angle, you start adding the value and you start being involved in the dialogue, so you can be involved higher up the food chain. Business development goes very closely together with advertising sales and it raises you above the competition.
www.mandmglobal.com
About pricing pressures
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