Relationship between advertising and media agencies

by Sree Rama Rao on April 15, 2009

It is imperative for the marketing team, the owners of the brand, to strengthen their internal capabilities. The added complication in the Indian market place as compared to develop markets such as US is the lack of transparent and third party data around cost benchmark and actual performance in a medium like OOH. Hence there is a high reliance on the media agency in India to provide the baseline for any such analysis resulting in a high dependence on them for media ideation, campaign planning and post buy analysis. Marketing teams who understand their target audience media consumption habits, competitive benchmark (spend, GRP/TRP deliveries etc) can contribute to evaluation of media mix choices and brand led media innovation. In fact our experience shows that the marketing team can contribute significantly to media buying negotiations along wit the agency. Ability to go beyond discounts on “inflated” rate cards will require marketing teams to develop knowledge about media at par with their suppliers – best practice Indian companies have already started the process of investing in internal capability building.

The relationship between advertising and media agencies with their clients is truly one of the long standing examples of partnership and collaboration across business functions. While a relationship of trusted partnership with the advertising and media agencies is essential, it is also mutually important for the players to follow a diligent and regular review process across all aspects of the relationship. Apart from adherence to processes and policies, a re-assessment exercise re-calibrates and authenticates existing contracts, spends and execution pattern. Variable payments often are a very small portion of the overall remuneration, KPL linked payments are few and far in between and there is scope to improve transparency around financial transactions. This exercise should ideally leverage other internal departments like Finance and Procurement as well. If the relationship with the agencies is based on very high mutual trust then it is easy to make these assessments an intrinsic part of the checks and balances regime. Key performance aspects like agency remuneration, performance linked spend analysis, assessment of media campaign effectiveness and competitive benchmarking should be a part of the scope. Market leaders find that regular assessments throw up insights and information that critically determine how their marketing budgets can be better utilized.

Innovation streak has not yet reached media strategy: Given the widespread challenges advertisers face in terms of communication clutter and inability of people meters to go beyond the demographic variables, innovation in media strategy is essential to enable brands to reach their target segments effectively. Best practice leaders have demonstrated that breakthrough innovation is possible across channels – be it the use of advertiser funded programming or innovation in outdoors through 3D bill boards. Hand on heart, not many marketing teams can stake claim to breakthrough ways of reaching their target audience and this points to capability and process issues. Another area that Indian advertisers as a whole have been slow to adapt is the use of non-traditional media. While in most developed countries TV and print contribute 50-75% of all media spends, the number is still as high as 85% in India. While some brands have adopted brand led web-portals and targeted SMS based promotion routes, this area remains unexplored. There is an urgent need for brand teams to decipher and fully understand the multiple forms of web advertising emails ads, search engines ads and now mobile advertising as consumers have taken to these media at a rate much faster than advertisers. Again the key prerequisites for innovation is for brand teams to build capabilities which otherwise would have been considered outside their domain.

While there is immense pressure on CMO’s to optimize spends; it is also a great opportunity for them to fundamentally alter the processes and capabilities which define how they are able to invest in their brands in the time to come. A rigorous assessment of their marketing organization process and capability can not only lead to cost efficiencies in the region of 5 – 15% but also infuse innovation and energy into the marketing setups.





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