A quiet revolution

The advertising industry landscape has changed dramatically in the past decade with the rise of the media independent to fully-fledged media agency powerhouse. The end result is the death of the full-service ad agency and the dominance of the media agency when it comes to media buying.

About 10 years ago, independent media agencies in the UK realised that if they bought media space in bulk, they could sell it to clients cheaper by acquiring discounts. However, it has not been an easy ride for the media independents that started this evolution of the industry. Labeled ‘discount media houses’ and the ‘bottom-feeders’ of the advertising industry in the early days by the ad industry and sometimes media owners, too, they led the trend that has separated the media planning and buying functions from the creative side in ad agencies.

Media buying and planning was often treated as a clerical function and staffed by administrative assistants. Budgets went to creative departments and the less glamorous media function was stuck in the backroom. It wasn’t until the big advertisers realised that they spent more on media than any other commodity, that they began demanding appropriate service and the media independent agency was born.

Media owners remain scathing about the lack of experience among media planners, the no-shows at meetings, bullying tactics for discounts and little investment in training.

South Africa followed the trend begun in the 1990s in the United Kingdom and Europe, and now happening in the United States, when clients began moving business to media specialists operating outside traditional ad agency media departments, for discounts and service.

“This revolution was driven by the clients, who found that media specialists did a better job,” says Josh Dovey, MD of Media Direction-OMD.

By the mid-1980s in the UK, the media independents were a force, stealing a huge amount of revenue from traditional ad agencies. Many of the larger ad agencies started buying up the media independents in order to set up their own separate media specialists. In the last few years, clients in South Africa began calling for separate creative and media pitches.

“It’s only in the past three or four years that ad agencies have aligned themselves with media agencies,” says Harry Herber, The MediaShop Group CEO. “There was always a bit of a ‘begrudging relationship’ before, as media agencies were regarded as the ‘poor cousins’ of the industry. Then clients wanted to do things better and smarter and saw media agencies as representing an additional source of revenue.”

Today, media agencies offer clients strategically-relevant media solutions and have moved away from the discounting system to results-based media decisions.

Dovey explains: “Media and creative functions have now split completely in South Africa — there isn’t a full-service ad agency left. We are ahead of the US with this trend. The industry has certainly been turned on its head. This is a positive force for the more progressive agencies.”

Driving the changes in the local industry were:

* Clients unbundling of the percentage commissions system in favour of fee systems.
* International clients demanding that media planning and buying be separated from the creative process and handled by specialists.
* The convergence of media options, which resulted in a blur ring of media types.
* The proliferation of media productions and options.
* The need to better target a consumer bombarded with increasing media choices.

Continues Dovey: “The fact is, media agencies do media better than the advertising agencies. The explosion of media options has meant that we have to buy loads of research and invest in good people. The costs are high, and a start up agency usually cannot afford to set-up its own media buying department, so they outsource. We also have many ad agency customers who have bought into the whole area of expertise on its own and want to offer the best possible service to their clients — and part of that is outsourcing media to secure the best option for clients.

Says Herber: “I think we’re complementary. There is a desire on clients’ behalf to know that is a degree of choice in the media brains they want — not what they are given.”

The ad agencies were left with no choice but to follow the trend and all the majors have set up their own media buying agencies, many with an international partner. The traditional media independents contend that a true media agency is one with clients independent of its ad agency partner/creator.

Starcom is the newest media agency out of the Leo Burnett stable. Starcom MD, Gordon Patterson, believes that media agencies that do have an agency affiliation and relationship, are far more in touch with the advertising process because of their involvement in other aspects of the client’s business. Dovey, in turn, asserts media agencies that are truly independent can offer completely impartial media plans.

He says the important differentiation in media buying is knowing the mindset of the consumer. “We shouldn’t rely too much on numbers. Good research is absolutely essential but it’s not the only ingredient. The media we choose for our clients has to be relevant and focused. Niche doesn’t mean small, it means focused. However, many media owners have used niche as a crutch for being inefficient with small numbers.

Media agencies are undoubtedly the powerhouses of the industry. Some even outsource their creative now,” says Patterson.

The why

Discounts and specialisation gave the media agencies a reason to exist originally. The sheer avail ability of media options today makes them a necessity.

The process was driven by client, due to:

* Budgetary pressures, the few rands available have to be spent properly.
* Specialistion is a worldwide trend.
* The convergence of technology and increase in media options.

“Clients are looking for added value, not just a cheap schedule,” Patterson points out.

The total advertising cake is valued at R8 billion in South Africa. The top three media agencies bill 35-40% of all media placed in this country. Media billings have been doubling every few years and represent substantial revenue for the media agencies.

“Media agencies are like banks,” says Herber “The client pays us and we pay the media owners about 15 days or so later — this is our major source of revenue. Ad agencies have been looking for an additional source of revenue because they lost out to the media independents originally on all these billings.”

New Wave Media’s Steve Topp outlines the main criteria a client looks for when appointing a media agency:

* The ability to negotiate better deals.
* The ability to buy better.
* Ability to interface knowledgeably.
* Systems with which to administer the entire media function.
* Systems and ability with which to evaluate their effort.
* Systems with which to monitor their competitors’ efforts.
* How well the media point can dovetail with the advertising agency.
* The ability to move quickly on information.
* The media points’ ability to interface with other facets in the media strategy, ie PR, sponsorship and media based promotions.
* Access to media research.
* The people.

Dovey emphasises: “The big development is in the media — it’s such a cliché but you are now competing with so much more. So much more media to interact with, that breaking through that clutter is the single biggest challenge facing all of us. We have to be clever with our client’s money but responsible.

We have to balance the wild and wacky with strategy. A smaller slice of the money pie means we have to make campaigns work harder. We can’t rely on just one medium. Incredible woolly thinking predominated media — one went into television and that was it. Consumers don’t just consume one medium a day — people are receiving messages all day and we need to plug into a consumer’s daily media map and design a strategy around that.

“Clients are usually far more innovative than we are, given that they are paying media planners to be ideas factories. You can’t sit still in this market as a marketer, and there are constant product changes, new products, line extensions and so on — why should it be different for media?”

Dovey also encourages media owners to be more creative and innovative when presenting opportunities to media planners and buyers.

Challenges

One of the biggest problems is the lack of headspace — quality, trained media specialists. Attrition in the industry is rife, with many experienced people being poached by clients and media owners, or emigrating. Media owners and clients also charge media agencies with a lack of investment in training quality people.

Patterson says media agencies have to participate in the industry through the Media Directors Circle (MDC) and through training, lecturing and so on. “People are our most valuable resource.”

Industry perception is that discounting is still rife and that discounts demanded from media owners by media agencies are often not passed onto the client. The only way to get around this, say both Dovey and Herber, is for clients to audit regularly, for transparency to be assured.

Herber believes the issues are relatively simple and apply to the entire industry, not just the media agencies: “There are plenty of nefarious ways to take advantage of discounts and kickbacks; clients must audit — it’s as simple as that. Regarding margins, the solution is to ask the client for a fee, not a percentage. That’s the most logical way to go and assists with formulating budgets and resources.”

“I think the making of media into a commodity is a mistake,” Herber adds. “Clients should be coming to a media specialist for a plan, rather than just for booking space. Media is an idea. It is not about where’ you advertise, it’s how you use the where’. Added value is achieved, not by bigger discounts but by better ideas.”

Herber says the consumer is sick and tired of straight advertising and clients are demanding “more bang for their buck”. The weakness in the industry as a whole is that very few ad agencies have realised this and remain centred on topical, issue-driven advertising instead.

“There is also the under-representation of people of colour,” says Patterson. We have not promoted media as a desirable profession to the industry as a whole, let alone the main population group. Media is one of those wonderful destinations within the ad process where you can make a visible difference.”

The next step? Clients will discern where they want to be and will all be out to pitch. Media agencies, instead of having relationships with clients through their creator/partner ad agency’, will be dealing with clients direct,’ emphasises Herber.

MDC Gauteng chair and Acuity media director, Janet Watermeyer, says media planning is like any other professional service — you get what you pay for. There is media “scheduling” and then there is strategically-smart media planning. I believe that smarter media planning flows from a tight association with strategy, and that outsourced media planning can be too removed from the process.

The media marketplace is changing rapidly. Media planners are faced with increasing media options, more uncertainty in making the right media choice and more accountability for delivering results to clients. There is also more benchmarking of what works in media, and consequently more copy-catting. Media planning is becoming an increasingly important function within the marketing process.”

Watermeyer emphasises that investing the client’s media rand effectively is not just about getting a good deal with a media owner. It is about aligning a media opportunity with the brand’s strategy and finding ways of doing things differently. The plan ner needs to find new media opportunities, or find new ways of using existing media options, in order to stand out from the competitive clutter in the marketplace. Media planning is more and more the driving force behind the delivery of a creative solution to a client’s advertising problem,” said Watermeyer

We live or die by the quality of our media product and there is no fall back; media buyers are the end of the line, we can’t hide behind an account executive or creative director,” Dovey quips.

The client perspective

By Steve Miller, National Brands marketing manager

The efforts of the ad industry to elevate the importance of the media discipline within the traditional agency have led to clients believing that media was indeed a crucial element and worthy of at least as much attention as the creative product itself.

It is a small step from this vantage point to believing that outsourced, independent media specialists may provide a superior and more objective media solution than media departments within ad agencies. The driving force behind this view is that many clients perceive that media still plays second fiddle to the creative departments, and brand fiscal discipline suffers as a result.

Perceptions aside independent media specialists have objectively much to offer from the client’s perspective.

Often there are financial inducements, such as lower media buying fees (although the days of cutthroat cost undercutting appear, thankfully, to be over). Then there are the benefits of media-only focus: media specialists, real attention to your brand portfolio, creative-neutral media solutions designed to best target the desired consumer and the willingness and ability to innovate. It also appears that some of the most qualified media practitioners have begun to gravitate to the media specialists, so the media skills are often superior to that of the average agency. Subjectively, it would appear that some of the bigger independents also appear to have qualitatively different relationships with some of the major media owners, relationships from which your brands often benefit.

None of these, traditional media departments would argue, are unique to media independents and they may be right. What media independents do offer the smaller to medium- sized client is, however, the ability to tailor a group of media specialists uniquely to your brand portfolio’s needs in a way unlikely in a normal agency, where brands fit agency structures, not the other way around.

Probably the most important benefit is logistical control if you are a client with more than one brand at more than one agency. No longer do you need to co-ordinate the media strategy, planning, buying and implementation tasks of myriad agencies across multiple brands, often liaising between the agencies of creative origination and the buying agency via your own media manager. You have just one point of contact, one focus of control, one body to hold accountable and responsible and one relationship to manage, and an overhead that is outsourced.

Ultimately the choice between traditional media department and independent media agency is up to the client — both have much to commend them but the fact that independent media agencies deliver and are here to stay, is irrefutable.

The media agency perspective

By Josh Dovey, Media Direction-OMD MD

There has been a quiet revolution in the media discipline over the past few years and nothing demonstrates this better than a conversation I had with a new client recently: “I knew you could buy well,” she said, “that’s why I came to see you. What I wanted to find out was what else you could do for me”

The fact is that advertisers are looking for media strategies that will enable them to talk to their customers, and cut through the 2 500 commercial messages we all receive every day, most of which do not register.

This problem is not new but whereas old-style media planning would simply provide a conduit for the creative work to be exposed to the consumer, we believe that our responsibility doesn’t end there. Great creative work will always be important in achieving the “cut through” but it should no longer have to work alone.

When Virgin Airways put a tray of eggs on the luggage carousel at Johannesburg International airport, the actual audience on the day was small in mass media terms. However, the cut through was instant, and the subsequent memory will reinforce the Virgin message whenever those people are exposed to any Virgin advertising in the future. There was also a considerable PR effect, just for good measure. This is a fine example of media planning merging with a creative idea.

Obviously, for most branded goods and services there is a requirement for mass communication, and you can’t run an entire campaign based on one-off wacky ideas. At the end of the day we have an enormous responsibility to spend clients’ money to achieve the best-balanced return. However, a clever media idea that is strategically sound can reinforce the main thrust of the campaign and bring it to life. The two are not mutually exclusive; in fact, they must be totally integrated.

The importance of this philosophy will grow more acute over time as advertisers do business in an increasingly complex world. New technologies are creating new channels of communication and distribution, and giving birth to a constant flow of new media opportunities. These must be assessed, interrogated, and the good ones integrated into the overall communication. Advertisers must also make the time to be part of the process — it’s always tempting to reject something different in favour of the trusted formula, but the way you talk to your customer, like anything else, must evolve.

The media owner perspective

By Giséle Wertheim-Aymes, TML Consumer Publishing GM

The challenge to perform in a market that has been in recession for the past three years places media owners and advertising agencies under huge pressure. Increasingly, the focus is on margin, and on driving margin through volume or value growth. Yet, advertising budgets are not growing to accommodate the multitude of media choices, nor are they keeping pace with media inflation.

With the continuing fragmentation of the market, media owners face perhaps the most serious challenges. Many of these can be met by being more flexible, innovative and intelligent about our offerings, and by proving our value.

Given that we accept that the onus of proof of worth rests with media owners, we take the hiring, training and keeping of the staff who represent us seriously. And when we don’t, we pay a huge penalty. We know we have to prove the value of our media to agencies and their clients.

It is therefore not unreasonable for us to expect that, as judge and jury, media decision-makers are qualified, skilled, trained and committed to making fair and transparent judgements on what we have to offer.

Yet, this is often not the case. Of concern is the growing number of good people leaving the media planning industry (often also the country). It is of critical importance that agencies keep good media planners and are focused on training up-and-coming talent to accepted norms of professionalism. We’ve had media directors and their staff not show up for a pre-arranged presentation in their own boardroom by our executives and editors.

Granted, there are great initiatives in the industry, such as the MASA training spearheaded by Virginia Hollis and her volunteers. However, I suspect that more media owners than agencies are sending personnel through the training.

Though we have a healthy respect for the agency’s role as custodian of the media strategy, and always try to avoid going direct to client, given the present context, it is sometimes suicidal not to pursue the ‘client direct’ strategy. For example, we have gone to the lengths of flying to Paris, France, to present our argument to a client (successfully) because the agency wouldn’t give our brand fair due. We know that, with the fragmentation of the media, planners are finding it impossible to see all media and do their jobs in reasonable working hours. I think these people are some of the hardest working I know. But recessionary times are not forgiving of these limitations. They demand results, so we cannot accept that we are not given our due.

The management of agencies have to take media more seriously and invest in these departments and people. By the same token, we fully accept our responsibility to invest in the staff we send to them with media opportunities. At the end of the day, agencies and media owners need to meet this challenge together in order to serve the interests of our mutual stakeholders... our clients and their brands.

From Marketing Mix website.