If you want transparency then maybe you’re going to have to pay for it
Recent weeks have seen extensive debate regarding the relationship between agencies and advertisers. Mumbrella editor Alex Hayes argues that clients must take some responsibility for the state the industry finds itself in.
The revelations of the last couple of days around Mediacom’s misreporting of campaign performance will have clients across the industry asking tough questions of their own agencies about what is happening with their own business.
But before auditors become the only winners, it is worth examining why things are going wrong.
Should be printed off and stapled to every client and procurement person’s desk.
.Well said … or stapled to their forehead.
so let me get the gist of this article straight:
– we advertisers have to err on the side of overpaying media agencies
– because they are commodity suppliers
– who can’t articulate their differentation
– and who can’t articulate their value to our business
– otherwise, we only have ourselves to blame if they lie to us?
if so, it’s another indication of how backward and anachronistic adland is compared with the real business world
can you imagine a law firm mounting this argument to a corporate client?
“look, we know we overbill you with make-believe hours, but you’ve got to see it from our point of view – it’s the only way we can sustain our $500k salaries and 1:1 PA to partner ratio. You don’t expect us to drop off our own dry cleaning, do you?”
So Sammy let me get this right.
– client demands 90 day payment terms
– media terms are 45 days
– agency terms are 30 days
– agency ‘wins’ with prompt payers, loses with slow payers
– agency bankrupt with 90 day terms
I suppose it gives more time to polish your boots after licking them for you.
Completely agree with Sammy, a few less yachts, ridiculously expensive parties and subsidised cafes, bars etc etc etc. could completely revolutionise this outdated business model. This has been a long time coming and I hope at last we may see some change to an industry that is filled with ego, self-interest and entitlement not to mention the moral compass of a bunch of sociopaths, constantly exploiting the power and responsibility given to them by their clients.
I noticed the very accurate use of the word intimidate, how can you expect anyone to consider for a second intimidators and liars are going to suddenly do the right thing with more money? Because more money cures bad character? If they can’t be trusted with a little, imagine what they’ll do with a lot. TIme to innovate (lawfully) or die. nb arbitrage does not count for innovation in 2015…
A few less yachts? Are you kidding? I’ve sold all the others off and am down to my last one.
@Grow up – in your free time between rants, I’d love it if you could point me in the direction of either the yachts or the subsidised bar. In particular the ones I’ve bever seen before in fifteen years working in five agencies in three countries in two hemispheres. Thanks.
The question is, why does the agency offer a 90 per cent discount if they do not know they can secure this from the media owner and if it is going to put them out of business? Sounds like they bit off more than they could chew and are incredibly naive. Not sure why that is the client’s fault.
Apart from adding middle costs, what does an agency do? There is a cozy arrangement that stops clients from doing their own placement and buying.
Patrick, was your question posed to show how little you understand the industry?
Oh, hang on. Your next statement confirms that.
No industry had a right to exist. Clients can’t force an agency to accept a deal. If a car dealer said they had to fiddle the figures to make money because customers ‘forced’ them to make a loss making deal you’d laugh straight to their face. Mature industries compete aggressively above their marginal cost line. If agencies want to gamble on volumes making up for lost margin, their success or failure is completely on them.
So the value bank as an industry rumour has been proven. What about the kick-backs to an agency guised as the agency training the publisher? The clients money is being used to negotiate a kick back to the agency. Isn’t this form of activity illegal? I read a post this week about calling the ACCC. I think it is a police matter. Come on mumbrella – dig into it and help clean up the industry. There is so much good in this industry from new tech, brave clients, great creative and the it all gets a bad rap due to these agency holding groups bullying publishers into providing a kick back but also other publishers can’t compete because the money is tied up. That part is a ACCC matter.