Should Channel 5 be approaching Omnicom clients directly?

Do advertisers lose out in the trading dispute between the media group and the broadcaster, Arif Durrani asks.

Tensions between Omnicom and Channel 5 ratcheted up last week when the broadcaster sent an uncompromising letter to all of the agency group’s clients, asking them to seek "independent advice" about their media.

Dust-ups between media’s trading boys – and, yes, it remains a strikingly male domain – are not new. However, the situation between Channel 5 and Omnicom appears to have taken the industry into uncharted waters.

The broadcaster is telling anyone who will listen how there has been no dispute: "For there to be a spat, there needs to be an argument," disgruntled Channel 5 leaders stress. Omnicom shops spent nearly £50 million on Channel 5 in its last full year. The broadcaster has not received any advertising from OMD, Manning Gottlieb OMD or PHD since last summer and now feels it has nothing to lose.  

The situation has been exacerbated by the knock-on effect of the cost of advertising on ITV and Channel 4 rising in double digits in the first two months of 2015, while that of Channel 5 is down by more than 10 per cent. Advertising on Channel 5 represents great value for money right now.

In many ways, it is the media story of our time. The biggest media agencies have spent much of the past decade consolidating their buying functions into centralised units. From WPP’s Group M and Omnicom’s OPera to Dentsu Aegis Network’s Amplifi and Pubicis Groupe’s VivaKi, the approaches may vary but the ambitions are the same.

Streamlining the buying of time and space from media owners makes sense from an operational point of view, creating fewer contact points within the shops. Few doubt that the centralised units provide more buying power for the agencies too, enabling them to secure the best deals from aggressive media owners – the global technology giants in particular.

But what is the true cost of this centralised structure? What does it do to the agency’s trust in the marketplace when buying seems to override planning? Do the likes of Sony Music or McDonald’s really benefit from not having ads around this year’s Celebrity Big Brother?