Dear media agencies, stop acting like you make too much money

The Drum 08 Apr 2020 04:33
A number of advertisers have expressed concern over their agency’s responses to inquiries about the fee arrangement.

If the media transparency crisis of 2015 was not enough, the coronavirus (Covid-19) crisis of 2020 is bringing out the best and the worst in the media agencies. Just like in 2007 with the global recession, media agencies are bending over backwards to assist their clients in times of need, going above and beyond in providing outstanding media services in this time of crisis.

The danger for the media agencies is that what may appear like helping their client is being interpreted on the other side, especially by procurement, as evidence that media agencies are still making a good profit from revenue sources other than fees. Wink, wink.

As I have written previously here, in the maelstrom of the financial crisis last decade, agencies were quick to take on either more work at no cost or do the same work for significantly lower fees, thinking they were investing in the relationship and helping their marketing clients in their time of need. Better this than have to defend the account in a pitch. But instead of the marketers making good for the investment of money and resources, what followed was a decade or more of procurement-run tenders to drive down media and agency fees.

So, what am I referring to? Unfortunately, due to commercial confidentiality, I cannot share the details, but here is the general premise of three recent situations.

Another client was concerned about the continuing high turnover of agency staff on their account at the agency. They had also been with the agency a number of years and, in fact, their media spend had almost doubled in that time without any change in the agency fee or the resources. When they approached the media agency with their concerns, the agency immediately offered to add an additional six resources to the account at no cost to help settle the business. Again, a very generous offer and one that had the immediate effect of placating the client’s concerns and raising the interest of the procurement team as to how the agency could afford to add additional resources at no extra cost.

And it goes on. Not just in one market or one category or one region, but globally. It is easy to understand the conundrum for the media agencies. At a time of such great uncertainty, stepping up to help your clients in a time of need should be expected and rewarded. Agencies are quick to jump in to assist, but they need to consider not just the long term relationship impacts, but the more immediate appearance that giving away free agency resources or valuable agency time creates, especially when most media agencies maintain that the dark days of kick-backs and the like are behind them.

Which would explain why they are so quick to give away something as valuable as their people in a time of crisis.

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Darren WoolleyTrinityP3
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