Media Perspective: Inflation could be the cause of a few client/agency splits

The news that several of the leading agency networks have revised their adspend forecasts upwards might not be universally good news for the media industry. While media owners are breathing a collective sigh of relief that spend is coming back into the market, the word is that inflation in the TV market has caught some agencies and, therefore, their clients, on the hop.

With demand comes inflation and TV prices for April are said to be 20 per cent higher than some anticipated. Prices for May could be anything up to 25 per cent above those some clients have planned for. This situation seems to hold potentially serious consequences for advertisers. Last week, I spoke to one creative agency boss who said that the TV plans on two of his clients had been underdelivered over the Easter period by the media agencies on each piece of business.

These TV plans for April would usually be signed off in February to meet the AB deadline, so presumably these agencies underestimated demand and TV pricing for April. And this cock-up has left them having to explain a 20 per cent shortfall in delivery to their client and the ad agency involved.

It seems amazing that this could happen in a world where TV buying departments are usually well on top of pricing issues. But lack of co-ordination between planners, buyers and agency forecasting departments coupled with an over-long signing-off process can result in media plans that are out of date before they're even finalised.

And the weight of expectation placed on agencies to deliver greater cost-savings in pitches or contract negotiations last year can't have helped. Many of these negotiations will have been based on the prospect of media deflation or zero inflation during 2010 and so have the potential to destabilise an already volatile marketplace. It seems that some of these negotiations have left little or no room for flexibility and fail to take into account market fluctuations.

Widespread panic is not on the cards but there seems little doubt that demand and inflation in TV has caused problems. While clients with media backgrounds are likely to show some level of understanding, others will be less inclined towards patience and taking the long-term view with their agency.

There's no hiding place in an era when TV can be measured relatively accurately and where many clients' econometric models link a specific number of ratings to delivering an anticipated level of footfall into their stores. In that context, you'll clearly be pissed off if you were told your money would buy you 500 TVRs and instead you got 400. Sadly, the likely outcome of all this could be the beginning of the end of a few agency/client relationships rather than a greater understanding between the two.