Who is your media agency really working for today?
by TrinityP3 on Dec 20, 2013
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They plan and buy your media and you pay the bills, so it is logical to say it is you. Right?
But what if you found out that increasingly your media agency is getting paid by the media owners they are buying your media from?
You would want a cut of the action. Right?
But it is not that straight forward.
You see what is happening is when you brief your media agency to buy media you are paying them a fee which is usually equivalent to less than 5% of the media spend.
They in turn go to the media owner who can offer them up to 30% in most cases as a discount of rebate. And in the case of digital up to 80%.
Now this can be passed back to you as a discount or added value to you or they can pool it into the total spend with the media owner for all their clients and get even more value back.
This could be in the form of cash rebates for the total spend.
Or credits or free media inventory they can sell on to other advertisers.
So why do the media agencies do this?
It is not because they all want to. But if one does it they all have to do it.
You see the problem is that increasingly advertisers choose the agency with the lowest costs. So the agencies have had to cut their fees to win business. But to maintain their growth and profits they have had to turn to the media owners to subsidise their revenue.
The end game logically is that you will get your media planning and buying for free. Not a bad deal really. Or is it?
You see, it means the agency services and advice will be paid for by the media owners selling the media.
And who really wants that? Do you?
If not, let us know. Because at TrinityP3 we can help you ensure your media investment is delivering the value you deserve. Not just costing you the price you paid.
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