Do agencies hold too much power?

Will advertisers suffer from Omnicom Media Group's decision to pull all ads from Channel 5, David Benady asks.

The decision by Omnicom Media Group to pull all its clients’ advertising from Channel 5 for the last six months of the year has once again raised the question of whether media agencies have become too powerful.

Three buying groups control nearly two-thirds of the UK advertising market, and their stranglehold is spreading to online and mobile markets too. These groups regularly pull their adver­tising from media owners, either to gain preferential rates or to play one broadcaster off against another.

OMG’s advertising blackout through its central buying house, OPera, will keep up to 90 of the UK’s top brands – including McDonald’s, Renault and The Co-operative – off Channel 5 during its busiest, Big Brother-led period.

The dispute has raised fears of what can happen when the now centralised buying unit ride roughshod over planners and clients’ interests.

OMG’s recent move has been widely interpreted by the industry as the likely result of agency over-trading, with the group getting its numbers wrong and failing to spend enough money on ITV to honour its agreement with the broadcaster.

Philippa Brown, the chief executive of OMG, flatly denies such speculation: "That is not the reason we have entered into a groundbreaking partnership with ITV. We put our clients first and evaluate all potential deals versus the needs of our clients. The deal with ITV ticked all the boxes."

The development marks the latest in a string of advertising blackouts ordered by media agencies. Last year, WPP’s Group M very publicly fell out with Channel 4; in 2012, Havas Media had a spat with Channel 5 that resulted in 12 clients being off-air. And many lesser-known disputes happened in-between.

Group M controls 35 per cent of UK advertising, while OPera and Publicis Groupe’s VivaKi control about 14 per cent each. Richard Dunmall, the managing director of advertising at Bauer Media, is not overly concerned, believing the role of agencies were undervalued until the explosion of digital changed everything and gave them the recognition they deserve at the top table with clients.

So, are agencies unfairly bullying media owners?

 

MAYBE Bob Wootton, director of media and advertising, ISBA

"WPP and the aborted Publicis Omnicom Group would have tied up almost two-thirds of the market. Then there’s vertical integration. Advertisers appreciate efficiencies, but many were and still are concerned at the scale of mark-ups."

 

NO John Litster, managing director, Sky Media

"There is market equilibrium, and competition is the force that keeps the balance. We’ve moved beyond a ‘size is everything’ approach to integrated discussions about how to get the best out of a medium for advertisers’ benefit."

 

MAYBE Liam Mullins, head of trading, the7stars

"Let’s be honest. This dispute isn’t about flexing power, it’s about OPera paying back the money they owe ITV. It’s a drastic measure and nobody wins, least of all the clients who are missing out in the short term on TV exposure."

 

NO Dominic Grounsell, marketing director, More Th>n

"The client is ultimately the person who makes the decision whether to spend money or not. Were our media agency to pull money from a channel for its own reasons, I’d be questioning why that would be beneficial to me."

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