DEATH OF THE MEDIA AGENCY: As media agencies adapt their offering to help themselves stand out, have we seen the end of the traditional media agency model? Ian Darby investigates

There was a time when any media agency worth its commission would

build its credentials on formidable media buying. Saving clients' money

by negotiating tougher deals with media owners was a key plank of your

average media agency pitch.



Today, though, media buying and implementational planning are often one

of the last things media agencies shout about. From strategic planning

to econometric modelling or database management, media agencies, it

seems, are no longer happy being simply media agencies. Could this be

the beginning of the end for the media agency as we know it?



Most of the large media agencies can no longer rely on their core

disciplines of media buying and planning. As media buying becomes more

commoditised and more globalised, there is less to choose between

agencies on either price or service. The need for a tangible point of

difference is more vital than ever and media specialists are adding new

services to provide this difference.



Consider, too, that media planning and buying - business traditionally

won or lost on the cut-throat commissions agencies are prepared to

accept - is not exactly a money spinner. Agencies have long needed to

find new routes to tap client budgets.



But also agencies have sensed that clients' needs have changed. They

want more research and quantifiable proof that their media activity and

advertising works. Yet they are also open to ideas as new media channels

open up and the role of traditional advertising in the media mix at once

becomes more complex and diminished. All of which adds up to a clear

opportunity for media agencies to grow from media specialists into

broader communications specialists. And it's an opportunity many are

already attempting to embrace.



Speaking to leading clients and agency chiefs, three forces emerge as

driving this diversification. The first is the launch of big joint

buying, or at least TV negotiation points. Interpublic Group's Magna

Global, which pools TV negotiations for Universal McCann and Initiative

Media, is a prime example. As Mick Perry, who will head the operation in

the UK, points out: "Both Universal and Initiative will continue to

exist in the way that they do now, with separate offices and as

competing agencies, but they will no longer compete on price."



By stripping out what was once a key function of any media agency into

these new buying silos, the real question is what's left behind? Magna

will use its muscle to sort out the buying, leaving Initiative and

Universal free to evolve other services. So Initiative has already laid

roots in interactive (Fastbridge) and has its own research division.



A second trend comes from networks such as PHD Group that are trying to

build a more upstream business, getting closer to the heart of clients'

branding and marketing issues. The idea is to continue to offer some

level of buying and traditional media planning while refocusing to

locate brand planning at the heart of its offer.



Similar thinking, if not the same fundamental approach, lies behind

Tempus' creation of Tempus Partners, which allies CIA's traditional

media strength with the brand consultancy of Added Value and the digital

focus of Outrider.



Then there are agencies such as Naked Communications and Unity, which

seem to believe that the traditional media agency model is fundamentally

flawed. They would claim to go beyond a PHD or Tempus Partners. The

argument is that even the more enlightened media agencies are still tied

to a buying model and, therefore, are unable to offer impartial brand or

creative strategy insights.



Many clients, it seems, remain to be convinced, though. And that's the

key. It's all very well for media agencies to recreate themselves as

sophisticated communications companies with a raft of high-end services.

But what do the clients themselves want from the media agency of the

future?



Many clients are pretty savvy about why agencies want to grow beyond

their traditional base. Keith Moor, the head of marketing communications

at Abbey National, says: "There are fewer media independents. Most are

now part of groups and have a requirement to get more profit out of

clients.



To do this they need deeper relationships. So I do think this trend is

at least partly driven by corporate pressure." James Kydd, the brand

director of Virgin Mobile, urges caution, though. It's all very well

trying to maximise revenue from exisiting clients, but he's wary of the

hard sell. "If agencies expand into loads of new services and then push

them all the time, it is desperately unhelpful because clients then get

suspicious. We should be putting our business with the best people and

not just doing it because it is the latest thing from WPP, for

example."



However, Moor is receptive if a new service from his agency will help

him. "If they help me understand how well my advertising works, then I

will invest in that service. That is something I would definitely pay

for," he says.



So accountability and effectiveness is a key area of interest to Moor.

Mike Moran, the commercial director at Toyota, is similarly interested

in services that can bring greater effectiveness in judging the impact

of Toyota's advertising. However, Toyota's approach is to stick

rigorously with specialists in all fields. Moran explains: "Media

agencies moving into areas where we are already using someone else who

is more specialist is probably not welcome. I think that sticking to the

knitting is good."



Toyota has used Zenith Interactive ("which we found good and filled a

modest need") and Moran sees a time when media agencies' understanding

of data may be valuable. However, he concludes: "Through my involvement

with ISBA, I talk to other clients about this and the majority don't

seem to think that integration of services has worked. The world is more

complex than when you had full-service agencies around."



Amanda MacKenzie, BT's director of marketing services, is interested in

the factors that drive agencies to launch specific services. "It is

interesting to look at why media agencies have chosen what to launch,"

MacKenzie explains. "Some head in to strategy, some in to interactive

and some go in to direct marketing. However, it would be good to see

more people looking at what I call real media futures - at where are the

emerging markets.



There are fewer people inventing and incubating than there could be. It

would be good to see more ideas related to how we can make media more

relevant in the emerging digital age, for example." Perhaps MacKenzie

has a point, but many media agencies would argue that they understand

how consumers interact with brands both through traditional and emerging

media channels.



But then that could be part of the problem. Won't the traditional model

of a media agency, no matter how many new divisions are layered on top,

still have a vested interest in traditional media routes? Naked's view

is that agencies are bolting on services because there is money to be

made, but clients want media-neutral advice. And being tied to a

planning and buying model makes it difficult to provide this.



Unsurprisingly, most of the large media agencies don't buy this

argument.



Take Tempus Partners' relationship with Coca-Cola, for instance. Coke is

still spending considerable amounts on traditional advertising but it is

confident that it can get good brand and media channel advice from

Tempus Partners. The thinking is that Tempus Partners has genuine

expertise in each area and yet is divorced from the implementational

media process because it is not Coke's buying agency.



However, some clients do buy in to the spirit of independence and

impartiality that agencies such Naked and Unity can offer. Peter

Buchanan, the director of marketing communications at COI

Communications, says: "I think a few of the new kids on the block, the

Nakeds and Unitys of this world, come with the right mindset because

they are led by people who have come from big traditional media planning

departments and have become frustrated with that. These agencies want

direct relations with clients where they are equal partners with the

creative agency. They find communications planning much wider and more

exciting than traditional agencies."



And that hunger for "excitement" is hardly surprising. All too often

media ends up being more of a commodity job than a stimulating

intellectual challenge - exacerbated on the buying side by the move

towards electronic trading and the launch of the buying silos.



Therefore, the development of new businesses is encouraged by those

youngsters joining the media industry who are looking for a more

fulfiling role at their media agency.



And media agencies have themselves recognised the benefits of bringing

in new blood from creative, interactive, direct response and branding

backgrounds and those people are also spearheading the move into new

areas.



However, despite all the posturing and thought that goes into launching

new services, some agency bosses admit that the real reason is very

basic.



As one agency chief puts it: "It makes your agency slightly more

difficult to fire" (this in light of media buying being reduced to a

"hygiene" service that all agencies are expected to provide).



In general, it seems clients need some convincing about the merits of

media agencies diversifying. Moor concludes: "I'm a hung jury. There are

many more intelligent people in media agencies than there were ten years

ago. Our media agency (Carat) drives our communications strategy more

than it has in the past. It understands our customer segmentation and

makes it relevant to planning. But it is important for agencies to

remember what they are good at. As well as diversifying they need to

remind clients of their core competencies."



And Moor is clear that clients will not want every service now being

offered by media agencies. He says: "Unless it makes advertising more

effective, gives me better value, I'm not interested."



On the other hand, Buchanan argues that in some cases media agencies are

not ambitious enough in the way that they are thinking about the

future.



He says: "Agencies tend to be conservative. A number of things have not

developed in recent years in the way in which they should - for

instance, the way in which media planners work with account planners

hasn't really altered. If agencies do decide to broaden their offer they

have quite a lot to do that is closer to home first."



As for media agency developments going full circle to recreate the old

full-service offer - well, most clients and media agencies can't see it

happening. Most emphasise that the way forward is to work more closely

with creative agencies rather than in competition with them, although

there are clearly sensitivities on how this trend will develop. Creative

agencies may be right to be nervous of losing business to media agencies

- recent examples include Michaelides & Bednash winning the

Workthing.com creative brief and Naked picking up Tate Museum work. But,

despite their thirst for exploring new horizons, most media agencies are

showing no inclination to launch full-scale creative departments.



Whatever happens, it is clear that the battleground of competition for

media agencies has shifted way beyond simply process and

implementation.



And while the old-style media agency may be breathing its last, it is

only to make way for a more thoughtful and sophisticated offering that,

while still perhaps founded on media planning and buying, will mature to

offer clients a whole lot more.



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