1. Media Industry Development
2014
1
THE ELEPHANTS ARE IN
THE MEDIA ROOM
Morten Pedersen, GLUE2020, takes a view on the issues that advertisers and agencies are facing in today’s
media industry.
The media industry is in a mess.
If your immediate reaction to that is
“Yeah? Tell us something we don't know”
then that too is part of the problem.
People working in media are now so
blasé about how their industry has
changed beyond recognition in the last
decade that they've lost all belief in their
management’s ability to do something
about it. But they can.
This is not about delivering client
campaigns on time, on message and on
price as media complexity increases.
Experiencing the adrenalin rush of
achieving unreasonable goals against
ever-increasing odds was part of the
decision set when you first came into the
crazy world of advertising and media.
Unfortunately, the problems run far
deeper than that.
As an industry, media needs to regain its
position as one of the most rewarding
and forward thinking industries to work
in – a place that attracts young, creative
talent as well as hard-bitten pros. But for
this to happen, there are a few
fundamental truths that need to be
addressed and a few elephants that need
to be seen off.
Clients don't trust agencies and
agencies don’t trust clients
Nothing poisons our industry more than
mistrust created by opaque media
trading practices. The lines are blurring
as media buyers become owners and
sellers of media inventory, creating
hidden agendas and margins that never
existed before. If agencies are ever to see
eye-to-eye with the clients who pay their
bills, they need to start acting more
decisively on media transparency and
start coming up with workable solutions.
Conversely, clients need to inform
themselves better about available media
trading models and understand the
financial implications of not achieving
full media transparency.
Agency remuneration models suck
Over the last 20 or so years, very little
has changed when it comes to developing
new agency remuneration models. In
2014, they will still be based on staff
clocking in/out plus occasional small
incentives. If agency leaders wish to stop
the downward spiral of ever-lower fees,
complemented by alternative revenue
streams, it’s time to get creative when it
comes to costing out agency services.
Going well beyond the traditional
cost/quality/service incentive and into
delivering business results is vital –
unless you want to hand your business
over to the management consultants, of
course.
Client-side media experts may soon
be an endangered species
Everyone knows that media still
represents one of the biggest capital
expenditures – the disappointment is in
how few global corporations have
actually invested in building a proficient
media organization and culture. As
controversial it may be, the reality is that
real client-side media experts are now so
few and far between, it’s no wonder that
so many corporations struggle to extract
the best value from their media agency
partners. Clients need to show much
more leadership and redirect investment
back into media-specific training,
recruitment and media performance
management frameworks. If they don’t,
agencies will increasingly buy plans that
match their agency volume deals, rather
than reflect the true scope of their clients’
ambitions.
Clients won’t do the maths
These days, when it comes to media
budget allocation, far too much is left to
“gut instinct” and far too little to
calculated risk. Whether it’s integrated
and cross-channel measurement, brand
portfolio media management, or simply
annual negotiation strategies, exhaustive
analysis is very rarely done. Why? None
of the above are too difficult to analyze
from a impact and financial POV, yet
clients are as reluctant as ever to do the
sums. If advertisers decided to spend a
little more time on the good old media
planning virtues of reach, frequency,
recency and engagement, they surely
would realize just how much value
resides in optimization.
ROI talk is cheap, delivery isn't
Despite the bundles of consumer and
digitalized tracking data being readily
available to agencies and their clients,
ROI is still all too often measured in
oversimplified and pure media metrics
and KPIs. Agencies need to start
providing more developed econometric
modeling and marketing-mix analysis
(that go well beyond media metrics) if
they ever aspire to be considered as true

2. Media Industry Development
2014
2
business partners. Being able to prove
the positive and quantifiable contribution
to a business beyond media and/or sales
should be the least a client expects from
choosing an agency (or consultant/
auditor for that matter) to provide a
service.
Clients get robbed…every day
It’s amazing how we have allowed digital
advertising to become the most
fraudulent medium of all. Whether it’s
bots, robot re-targeting, arbitrage or
viewability issues, there is no way
around the fact that over half of display
ads paid for by advertisers, are never
seen. Common standards need to be
agreed on urgently across the entire
industry - or risk an otherwise good
business model becoming another lost
opportunity due to lack of support from
marketers. Tip to clients: check the small
print on those insertion orders…
Legacy pricing = lost value
More than anywhere in the world, US
agencies seems to have convinced their
clients that last year’s pricing somehow
determines this year’s. But do they tell
you precisely how they now leverage
entire client portfolios into agency deals
to ensure better pricing, controlled
quality and a host of other advantages?
Do they hell! Thinking that the biggest
groups automatically offer the best
pricing/quality ratio to all of their clients
is a fallacy, deliberately peddled daily by
the very people doing the dirty. If you
doubt it, just ask one of them to explain
how it’s even possible.
Clients hate negotiating
Where does price sit in the value
equation? What should clients (or indeed
agencies) expect from a well-constructed
negotiation strategy? Questions like this
should be at the heart of any media
review but rarely are because of a chronic
aversion to the simple craft of
negotiation. Certainly, media price
elasticity is high at the moment but
focusing on short-term savings or cost-
cutting exercises is not the answer. If we
want to create sustainable net media
improvements, or return to client-agency
partnerships based on mutual
transparency and trust, we need to get
back to honest, objective negotiation. For
instance; whatever happened to having a
strategy for every value opportunity?
That would be a start.
In summary
Transforming a business through
strategic use of media $ still represents
one of the greatest opportunities out
there. But for this to happen, clients and
agencies need to build strong
relationships based on trust and business
results. Cutting corners won’t make it
easier; it requires hard and smart work.
So now you've met the media elephants,
make sure they never enter the room
again. It will only enhance your chances
for a healthy and long-standing client-
agency relationship.
About GLUE2020
GLUE2020 is a leading-edge consultancy
that enables corporations and brand
owners create, quantify and capture
value from marketing and media
investments. Entrepreneurial, we defy
the old consulting guard by offering
innovative services that design
enterprises and agency relationships of
the future. We help Fortune-500
companies exploit the ever-changing
consumer landscape, the latest
technological developments, and
pioneering agency remuneration models.