The Years Ahead For ... Media Agencies

Nigel Sharrocks says 2010 will be about discovery - finding ways to work smarter, not just harder, and finding the funds to continue investing.

I know I've been asked to focus on the year ahead, but I couldn't let the opportunity pass without saying how marvellous it is to see the back of 2009. In all my time in the industry, I've never known a tougher year - but, then again, we are in the midst of the toughest economic downturn in a century.

I mention 2009 because I also believe much of 2010 will be spent dealing with its repercussions. 2009 was the year of the pitch and now promises will need to be delivered - it's going to be another very tough year for media agencies and media owners alike.

Are there any grounds for optimism? Although the market has shown some improvement across the final quarter of 2009, it is still likely there will be little or no revenue growth this year. Even if there is some billings growth, client fees are still likely to be down year on year, as a result of the feverish level of pitch activity. Only the most optimistic or cavalier of agencies will plan to incorporate any degree of growth into its business plans for the year ahead.

So it will need to be another year of tight cost-management balanced, of course, with the over-riding need to service clients, which is still very much about people in both quality and number. As we all know, the task of rising to meet the exciting challenge that digital technology is bringing to the media industry was already tough, but the recession is just making it harder.

Understandably in the current climate, clients have wanted to explore many more options with final decisions often left as late as possible. All of this adds greatly to the workload and the pressure on our people - I am increasingly of the view that we have squeezed about as much productivity out of our people as possible and we can't solve all our issues by working harder and harder. This year we must push ahead with finding newer ways to work smarter, not just harder.

Virtually every client company is running the mantra of "more for less", but have media companies applied this thinking as rigorously to their own businesses? The growing use of technology, outsourcing and offshoring must be high on the agenda for next year and not just in the digital disciplines. To date, traditional media has only flirted with many of these developments - it's time to get serious. Doing more and more with the same resources or less can only last so long.

I began by saying that I wasn't very optimistic about this year from a media billings perspective, but I do remain very optimistic about the future for media agencies. In fact, I'm convinced it's a bright one. This year, the industry has to start fully exploiting the opportunities that this, no longer new, digital world offers.

New-business models are emerging, but not fast enough. As the years roll by, less and less of the media agencies' work begins with an ad. Instead it begins (perhaps as it always should have) with the consumer and the task at hand. And with the ever-increasing range of bought, owned and earned media to deploy, this is making the work of media agencies much more crucial to clients' business and marketing plans - brilliant news.

But new models require new skills, which, of course, require investment. Cross-platform and content-based approaches become more important with each passing day, along with search, social media, technology solutions and data.

So even if times are tough, we have to find the funds to invest - standing still is not an option. This again illustrates the urgent need to get on with driving even greater efficiencies from our traditional business.

The media business is on a knife edge. On the one side lies increasingly downstream commoditisation; on the other the exciting more upstream opportunities of the digital world.

During the last year, the recession and the sheer amount of pitching did a lot to tip the balance towards a focus on media pricing (and commoditisation). This was certainly the hot topic between agencies and media owners. Clearly, if we want to capture the exciting future we need to get on with redressing the balance, and all of us - clients, agencies and media owners - have a part to play.

But I do believe it's a question of balance. Clients love cheaper prices, who wouldn't? Only a half-wit wouldn't strive for a better price in these tough economic times. We have to accept this, deal with it and move on. But we can't let it dominate all our conversations. This leads me to the most pressing challenge for 2010 - the need for media agencies to re-engage with the client fraternity on the art of media and its contribution to the advertising process, as well as championing its increasingly crucial role in building client businesses.

Far too little time and energy is being spent on this demanding but fundamental issue, while far too much time is being spent on the issue of pricing. In the end, it is the media industry's fault because it has been too easy to go down the cost and discount route. We have to re-establish an intelligent approach to media thinking, which isn't about knowing "the cost of everything and the value of nothing". And this can only be achieved by re-engaging with senior client marketers. Only by doing this will we redress the balance away from price alone.

One final challenge for the year ahead - and I suspect this might be the most difficult one of all - is for media people to start enjoying themselves again. For those of us who go back more years than we care to admit, we can confidently say that the 21st century media world is more interesting, more dynamic and has infinitely more opportunities than the media world of some ten or 20 years ago.

This applies to all media, from Saturday-night TV to viral activity. For intelligent and innovative media operators, it offers so many interesting and fun solutions. We just need to learn how to enjoy it again!

- Nigel Sharrocks is the chief executive of Aegis Media Northern Europe.