Recent months have seen Omnicom Media Group announce significant deals with media giants iHeartMedia (formerly known as Clear Channel Communications) as well as Twitter and Instagram, which amass to a total worth of $530 million.
Other agency groups have done the same. In 2013, WPP and Twitter closed a substantial ‘multimillion dollar’ agreement, as did Starcom MediaVest Group (SMG). SMG’s parent, Publicis Groupe, also announced a multi-year, multimillion arrangement with Facebook earlier this year as well as a $100 million Google upfront deal in late 2013.
For the agency groups these deals are highly significant, but what are the benefits for their respective clients? Supposedly, the agencies get access to bespoke research, unique data and new and exclusive ad formats as well as other goodies that they can exclusively pass on to their clients.
But realistically, how many unique ad formats can Google, Twitter, Facebook, Instagram and all the others really create and deliver for each of the agency groups and the multitude of distinct media agency brands that are part of them? Across Facebook, Twitter and other newsfeeds there does not seem to have been any significant change in content, display or the way we are targeted to by advertisers. So, what happened to all the exclusive formats and data? What other reasons may there be for global agency groups to pursue these deals?
The answer is, of course, ‘money’. One use of the money argument occurs when it comes to pitching. It used to be enough to be able to claim you were the biggest buyer in one specific medium. In today’s hyper competitive world, these deals signify that an agency is big and important enough to be able to pull off a multi-faceted deal with some of the most valuable companies in the world.
The other benefit of money is the potentially lower unit cost that advertisers may see. It seems unrealistic that the agency groups signing these deals would not experience any form of financial incentive or profit as a result of them, especially considering their scale. Surely these savings would be passed on to respective clients so they could see the rewards.
The deals made by Omnicom, WPP, Starcom MediaVest Group and Publicis Groupe are monitored commitments; the agency group CFP ensures that pressure upon the agency heads to ensure these commitments are being met is maintained. This means that the impartially crafted connection plan based on the advertiser’s brief might just be a tad biased towards the big deals.
In other words, if your agency of record is striking deals like this, you may benefit from the reach or improved rates, but are they the right channels for you? Flock provides independent, objective advice to ensure that your media is giving you the right results. Get in touch here.
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