Ad agencies’ fiercest rivals will increasingly be media specialists. They are actively restructuring, integrating functions and adding revenue streams beyond planning and buying that seemingly overlap with that of their mainstream brethren. Media agencies are sprinting up the value chain by offering clients services in areas such as content creation, especially digital content and branded entertainment, events, sponsorships, retail communications and consulting. WPP Group Plc.’s MindShare, for one, is restructuring globally, integrating its traditional and digital units, and ushering in new revenue streams and products.
Creative and media agencies both talk about diversification, though media men would likely approach this from the perspective of the channels of communications which connect with the consumer. Charles Courtier, CEO, global, Mediaedge:cia (MEC, part of WPP), agrees that the role of media agencies is changing and is now more central to communications and marketing strategies, and that the media brigade (not the ad agency) often leads in strategic design or holistic communications planning for brands across media.
“Yes, there is a lot of crossover and grey areas, especially in the digital space. With the explosion in digital media, how do you segregate content from channel? Very often, the content is the channel. “What is Facebook?” asks Courtier. Globally, MEC has MEC Access for sports, entertainment and cause marketing; MEC Retail; and MEC Interaction for digital.
Another global media chief, Patrick Stahle, CEO of Aegis Media Asia-Pacific (holder of Carat, a media specialist), says many ad agencies have not been able to grow their business, leave alone their profits, over the last few years, and that media networks have become strong as they have been able to adapt to change.
True?integration still eludes some media networks,?though. All media agencies are becoming good at doing more than planning and buying, but how do they integrate the services inside the networks? asks Stahle. He maintains that his agency’s edge over rivals is because it has not organized complementary services—such as digital, experiential and sports marketing—as separate silos, but under one profit and loss (P&L) account per country/market. “This is the constant struggle for the other networks—the possible cannibalization on the respective P&L.”
Still, media agencies are seen by clients as partners who spend on tools and research. They are the people who actually spend the clients’ media money and calculate return on investment and value offered by various media channels. That is a tough package for any big-idea creative man to take on. And, dealing with digital media is not easy for people in the creative function in traditional ad agencies.
Some agencies are now striving to bring media back into the creative agency. This may not solve the issue as media agencies have evolved and adopted a far more strategic role than most ad agencies. Yes, the creative work will always be vital, as strategy without implementation is nothing, though the challenge in the creative solution is not coming up with a 30-second spot or print ad alone, notes Stahle. It could be an event-driven campaign, such as some of Adidas’ store activities; content-driven campaigns, such as TaylorMade’s collaboration with ESPN; or community building. His point: The strongest, and most profitable, part of the ad agency solution—producing a 30-second spot—is becoming an unstable platform for sustainable business.
Agencies would counter they can do all this, and more. But they will increasingly have to prove to clients they can do some of these things better than their media rivals.
Marion Arathoon is Mint’s advertising editor.