What kind of agency do you need? (Thoughts on eliminating the middlemen in media)

Over the last 3 years I’ve been involved in about 18 agency selection projects with clients – where we help them evaluate and select an agency to manage their media. (By the end of this year I’ll have seen a few more of these projects). Across all these projects I’ve noticed one very consistent pattern – ALL the clients start off with looking at generalist media agencies (from the 6 international advertising holding companies) as a one-stop solution.

Here’s 3 reasons why that is not the best thing to do:

  1. Lack of specialized knowledge/tools/skillsets in many areas, especially ad-tech

Media agencies specialize in being non-specialists. They’re very good at broad media strategy and consumer insight but don’t always have the resources to do any single area (especially more ad-tech based areas like performance marketing) to a high degree of success. If you’re spending a large budget across TV, Digital Display, Digital Video, OOH and so on, then a generalist is a good place to start but if you’re more focused on ecommerce or programmatic media, then not so much.

2. Media agencies will use other players in the chain and make more money doing so

Media agencies tend to farm out work that they can’t do themselves. I’ve worked on performance marketing campaigns (in my DSP/ADN days) where we had a target of $4/install of an app and the agency had committed a higher number to the client, giving them a nice 20%+ number to live off of, for doing basically nothing. Working directly with DSPs and performance marketing agencies can make your budget work a lot harder.

3. Signing up with a media agency from a holding company DOES NOT get you access to the other specialist companies in the group

We’ve all seen the holding company slides with an assortment of logos and specialist companies in various areas and many clients assume they’re getting access to all those specialists as needed. In reality, many of these specialists, especially if they’re start-ups in their earnout phase with an acquirer, are separate businesses from the media agency and will not provide any services that are not paid for at their, usually higher, consulting rates. This leads to generalists trying a DIY approach and often doing a much poorer job, or farming out the budget to external companies which leads to a loss of value in the buying chain.

How can you avoid these problems?

Take a close look at how you spend your marketing budget and whether there are a couple of key areas that can make or break your business. If so, that part of the budget needs to be handled by a specialist and you need direct control / access to them. This could be e-commerce specialists, performance marketing agencies, DSPs, DMPs or what have you – the advertising landscape is filled with specialists to choose from.

You could still go through a media agency but make sure you evaluate the specialists they work with (both within their holding company and outside) make your own choice and sign your own contract with them.

Alternatively, you may not need a generalist media agency at all. Evaluate the specialists and hire one and if you need some occasional strategy / traditional media negotiation that can be done on a project basis by a media agency or other consultant.

Media agencies may be the “Safe” option but they may not always be the right choice for you, depending on the size and deployment of your budget. For more on how to navigate those choices, write to me d.sriram@searchlightchina.com

With over 30 years experience managing agencies, ad-tech startups and consulting Sriram has a deep understanding of how media and ad-tech services work, especially in China. Reach out to him for more information on how to define and select your marketing services partners in China.

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