Advertisers and Agencies: money talks

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We are rapidly approaching the nonsense the annual ritual that is the Upfronts and Newfronts. And because it is always about the money, let’s look at some of the money grabbing headlines of the last week.

No, this is not about Snapchat being a loss leader in quite the literal sense, in that they are worth over $30 billion apparently, which is more than American Airlines or Campbell’s Soup Company, who are both turning in healthy profits, something that Snap is failing to do. None of the expert reviews I have read since Snap burst onto the stock market last week provided any clues as to how they are going to make a profit any time soon, but what do I know…

P&G’s Mark Pritchard continued his quest for normalcy in advertiser and agency holding companies relations, speaking last week at the ANA conference in Orlando. In a measured and highly entertaining way, he dismissed each of the market’s (read: agency’s and assorted middle men) objections, delivering precise and acceptable demands that would make the advertiser-agency world a better place.

And now that Unilever has joined the chorus to find solutions, we can officially speak of a tide that has turned.

And so it goes back to the Upfronts and Newfronts. Analysts expect the TV ratings to be down by low double digit’s year-on-year. But… most analysts are still expecting the market to pretty much sell out and prices to increase modestly. Kind of like Snap – not delivering a sound business yet rising in price. Not in the UK. There, the largest commercial TV network (ITV) is reporting a decrease of 3% in advertising spend, the first decrease since 2009. But they are Brexiting, whereas we are making America great again, so there is that.

David Cohen, President North America for MAGMA, IPG’s media buying operation, last week stated that agencies today are in the intelligence business. To prepare for the future, he said: “agencies need to be able to analyze marketplace context, understand the business economics (the business of running the business), build trust and transparency, leverage technology, data and automation and win the talent war with diversity, culture, training and development.”

Yes, please. Do all of that. P&G and Unilever (or the future Kraftilever) might well be your next big client. Or pitch.

Surely, advertisers are also still very much in the driving seat to arrive at the change they so loudly proclaim they want. Per a recent survey, many (most?) advertisers continue to evaluate the performance of their media agency predominantly on price. And then they associate the agency’s performance bonus to their ability to deliver on their pricing targets. Guess what happens next?

At the same time, it is not exactly easy for the agencies to continue to claim they are as much victim in the messy marketing world as the marketers are. WPP just reported that 2016 was a record year, with profit increasing 20.6% to over $1.5 billion. That is money made by servicing advertising accounts, creating strategies and content, buying and selling media, analyzing and modelling vast amounts of data and a whole range of other services paid for by… yes, marketers (and media owners?).

Luckily we now have a new 4A’s president in Marla Kaplowitz, who at least “speaks media” as she came from media agency MEC. Marla: your move! What David Cohen said!

In the mean time, if you are a marketer interested what all of this means for your business, your marketing or your agency eco-system, just reach out. We will gladly prepare a selection of relevant case histories for you to illustrate what marketers can and should do to mitigate risk, avoid unnecessary expenditure and increase effectiveness.

 

[Maarten is a featured contributor to MediaPost, this article was originally published here]

 

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