Media Agencies making forays into creative agencies

Media agencies are now increasingly making forays into domains that hitherto were the creative preserve. It’s unlikely that creative agencies would agree with this assessment but then most media people believe that creative agencies are living in denial. They believe that this partly stems from the fact that in India, most media agencies were created as spin offs from the agency and very often reported to the creative agency head. Today however with the scale they are at, most media agencies directly report into their global bosses and have little connection with the creative agency that gave birth to them. Most creative agencies still haven’t got the plot. That is why many go all nostalgic about structural re-integration, hoping they will get back the media department they themselves spun off or even sold, as agencies.

It’s a cry that is being heard the world around as media agencies increase their foot print and standing in the marketers domain. The question though is that if such a reintegration should happen whether creative agencies will be content playing the poor cousin this time around?

The one point where creative agencies can stick it to the media agencies is remuneration. No matter how equal marketers might consider media agencies, they remunerate creative agencies on a much higher scale. Most media agencies believe that this is a legacy problem and it is a matter of time before marketers begin to correct the anomaly. While there are clients who pay higher commissions or have fee structures to reward performance, for many clients, media agency remunerations are determined by the historical precedents. For many media bosses the problem is that clients are demanding a lot more than what they are willing to pay for. While media agencies are constantly being forced to spend more to keep up with the demands, the remuneration is not keeping pace. Lintas Media Group make serious attempts in understanding the relationship between media cost inputs and the response for the same, in terms of consumer perceptions, health of brand awareness, or in some cases, even brand sales. Hence, it is my perspective that media agencies are not being remunerated currently to the extent to which they input into brands. Media agencies are under monetised and under leveraged as a business. For some reason they (creative) get paid a lot more for the intangible value they deliver, than we do for the tangible value we deliver. On the whole most media heads believe that clients do pay above the market rate for value delivered (though they do think they should be paid on par). It is imperative that clients remunerate those agencies better who add value to their business/ thoughts or challenge status quo. Proven performance and record in the market place is something clients should encourage.

If all of us agree that media agencies can make a huge difference to brand’s top line and bottom line, why pay them the lowest?” The query to address here is whether the premium for answering a “WHAT TO SAY” is worth 5 times what the media agency earns?” The argument that an increase in budgets always means a higher workload for the media agency, which in turn would imply that marketers need to relook at the rates they are willing to pay for the agency services. However, many believe that the fault lies partly with the advertising industry and not with the clients alone. The media agencies should be paid more but who point out that it was the advertising industry which valued their services at the 2.5-3.5% that they currently get. Besides the above the industry leaders also admit that there is fierce undercutting that agencies resort to in order to win business. They believe that this needs to stop. Remuneration should increase think that undercutting is a way of life. In any industry you can’t stop people from selling their wares cheaper and if there are agencies which can make money at those rates then why blame clients. Media agencies are underselling themselves perhaps makes the most compelling argument for a change.