It was a mere decade ago that trying to convince marketers to shift some budgets to online was a very difficult thing. At a company where I started towards the back end of the last decade, the average global digital spend was below 3%! Many companies back then had objectives like “shift x% of total advertising dollars to digital”. Evangelists roamed the speaker circuit making fun of companies and CMO’s that spent little to nothing on digital advertising.
Fast forward to today. There is a whole (greedy and part seedy) tech industry that eats massive amounts of digital ad dollars, to the extent that digital budgets are now larger than almost any other slice of the marketing pie. We struggle with significant issues like digital ROI and attribution, transparency, fraud, net neutrality, ad blocking and more. Google and Facebook are the largest advertising platforms on the planet. And marketers spend a disproportionate amount of time on trying to understand it all.
So yeah, digital media has gone from marginal to massive in 10 years, and is now as much main-stream media as TV is. Heck, in some cases, digital is TV (and vice versa).
So with that out of the way, we can address an event from last week that falls more or less in the same category of digital driving media, and that is WPP’s merger announcement of MEC and Maxus, two of their media agency brands.
This is not an insignificant event, first of all for the people that work in either of the two, as jobs will be lost, which is never fun when you’re on the receiving end of a merger. Secondly, as clients (we assume) you chose your media agency partner with great care, and now that agency will cease to exist. The name will change, the people will change (and might struggle a little with motivation during the uncertain transition), the headquarters will move (from London to New York no less), the CEO will change and as an advertiser, you might even find that a major competitor is now part of your newly merged agency client roster. Oopsies!
We have always stated that all global media holding companies are, first and foremost, financially driven companies, and agency service providers second. There is nothing wrong with this, as long as marketers understand that, ultimately, the agency’s first priority is Wall Street.
Advertisers are significantly restructuring their agency eco-systems and re-writing their agency contracts because of recent revelations about media agencies’ digital media practices and industry challenges. So this merger is all about cost savings and responding to an environment where managing clients’ media assignments is becoming less profitable. Especially since digital media is the largest chunk of a clients’ media budget. If you’re a WPP shareholder, you’re all for the merger. If you are otherwise impacted by the merger, I hope the outcome is a positive for you, too.
But if you have any questions about your agency eco-system, please feel free to connect. At Flock, we have helped marketers in reconfiguring their agency set-ups a great many times. Some were focused on one market or one discipline only (e.g. creative, media or digital), others were global or pan-regional in scope or covered multiple disciplines.
We have a handy “agency pitch checklist” that will help you in preparing your strategy and approach to an agency pitch. We call it the “Pitch Preparedness List” and we will send it to you upon request.
[Maarten is a featured contributor to MediaPost, this article was originally published here]
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