Advertisers Be Aware
When P&G's Marc Pritchard, owner of the world's largest advertising budget, describes the media supply chain as "murky at best, fraudulent at worst", it refers to the Dark Side of media agencies. And not many advertisers are fully aware of this Dark Side.
You might have heard of the media transparency issue, where media agencies receive undisclosed rebates from media owners, and media funds are used as "principal" to resell media inventory to advertisers with undisclosed markups.
This transparency issue leads to another issue, and that's media neutrality. If your media agency is incentivised by media owners with cash rebates, they will prefer to sell you media inventory which will maximise their profit margin, rather than delivering on your objectives. In other words, the media plans tend to be best for them, not for you.
And then, you have media price disparity. The same media inventory (let's say the same TV spot aimed at the same target audience) can be bought at a huge premium by an advertiser compared to another, all depending on the quality of their media agency contract and media processes. Best-in-class advertisers tend to get the best inventory, at a very competitive price, while smaller, less media savvy advertisers tend to get the worse inventory at a premium price. This is the reality today.
The Challenge
The challenge for small to medium advertisers, is how to get the same benefits than the top global advertisers currently enjoy. You might think that having smaller media budgets will restraint you more getting similar deals. But this couldn't be further away from the truth. The correlation between media prices and size of media budgets no longer exist.
Increased complexity has enabled media agencies to create opaque financial structures and then inflate their fees and media prices at will, while many advertisers are stuck behind contracts unfit for modern media buying that provide little scope for transparency and accountability.
So how can small and medium advertisers achieve this?
The Solution
1. Increase Transparency:
Advertisers have a duty to understand how much they are paying overall, and should be getting their fair share of the cash rebates media agencies receive from media owners. This may seem as a daunting task, but there are very effective techniques available which allows small and medium advertisers achieve full transparency and receive great financial rewards.
2. Improve Accountability:
The recent erosion of trust between advertisers and media agencies means that you need a strong set up and a process to hold your media agencies to account in case of under delivery. This needs to be accompanied by a thorough and ongoing assessment.
3. Bring Best Practices Onboard:
Advertisers are faced with an ever changing media ecosystem of great complexity. Not knowing media management best practices is what makes the difference between a best-in-class advertiser (with full transparency, competitive prices, and effective media planning) and an advertiser who relies to much on their media agency (and most likely gets the worse media inventory, at a premium price, without getting any or very little cash rebates).
The Benefits
1. Significant Media Savings:
Advertisers implementing the above solution tend to deliver a 20% to 30% savings on their annual media budgets, without compromising on the effectiveness of their advertising.
2. Improved Partnership with Media Agencies:
Once a best-in-class set up and process is implemented with your media agencies, advertisers can finally work in a true partnership with their media agency partners, with trust in the foundation of that new relationship. Advertisers then have the reassurance that the media strategies and plans are best optimised to reach their business objectives rather than improving media agency profit margins.
3. Effective Media Management:
Advertisers are reassured that they are getting impartial media strategy and planning excellence (i.e. all strategy and planning is conducted independently of media trading considerations and incentives to avoid conflicts of interest). They also able to adopt a data management strategy that brings ownership and control. They are capable to understand and control the technology needed to optimise their online advertising and meticulously analyse online performance.
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