PERSPECTIVE: Income disclosure will force agencies to focus on quality

With most media pitches, two things are guaranteed. The first is that every agency except the winner believes it came second. The second is the winning agency is often accused of ’buying’ the business by offering either to handle it at suicidal commission levels or by promising a level of discount that would be impossible to achieve.

With most media pitches, two things are guaranteed. The first is

that every agency except the winner believes it came second. The second

is the winning agency is often accused of ’buying’ the business by

offering either to handle it at suicidal commission levels or by

promising a level of discount that would be impossible to achieve.



However, the opportunity could exist to lay such unsporting suspicions

to rest. You will have read in Campaign last week that the Institute of

Practitioners in Advertising is set on issuing a league table of income

levels to stand alongside the traditional billings figures.



The move would be good news for the likes of Michaelides & Bednash,

whose business is such that it doesn’t register in any billings-related

chart.



I laboured through much of last year believing that M&B had suffered

from the loss of key accounts such as Cable & Wireless, only to discover

that the agency’s income was actually up by 35 per cent and profits up

by a staggering 75 per cent.



Consider, too, that New PHD’s triumph in securing strategic planning on

BT’s pounds 150 million business will not move the agency up one pence

in the billings league table. As media agencies increasingly embrace a

gamut of communications tools, billings from media placement represent a

falling share of their total business. So you might imagine that all

media companies would be baying for income-related leagues.



Of course not. And it’s clear why some will resist. This industry has

been its own worst enemy on commissions, with agencies undercutting each

other to win business in a strategy that undermines the work they

do.



Published income figures could throw commission levels into the

spotlight and make them even more of a competitive issue. To publish

income figures would, for some agencies, effectively be to publish

average commission figures. Clients paying their agencies above the

average would demand evidence that they were getting a better service

and that they were not subsidising other clients. Those getting it cheap

might start asking where corners are being cut.



It’s not an easy issue to resolve, but income figures would certainly

mean agencies will have to prove the value of their service more than

ever before. And that means a fresh focus on great planning, added value

and better marketing of media agency brands.



The IPA believes real advantages can be gained from releasing the

figures.



Of course, there should be greater recognition for the services media

companies now provide, which have nothing to do with media

placement.



But publishing income figures is just one step. What about a real code

of practice to move to a more professional status for the business. This

could finally mean getting paid a fair price for the business of

media.



Have your say in CampaignLive’s forum on channel 4 at

www.campaignlive.com.



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