Ho, ho, ho, Bah humbug and some home truths?
Hello, all. Despite my occasional misdemeanours/outpourings they’re still allowing me to contribute, so, in time-honoured fashion, as the year closes I’m going to join the many seasonal cliché-mongers and offer some thoughts and, dare I say, hopes for the year ahead.
I agree wholeheartedly that we’re living through a time of unprecedented change, much of it brought on by the disruptive power of digital communications. But I also think that we remain a conservative business that often seeks to play down the very same disruptive forces that are bandied about in client presentations about pretty much anything.
The role of agencies is therefore changing and will continue to change. Having lost pretty much all the means by which they can make serious money (e.g. media, production decoupling) and under relentless client procurement pressure, creative agencies have tended towards man-hours and materials businesses. Not a lot of obvious margin growth opportunity there.
Yet content is superabundant, as everybody is posting everything. So with all the issues surrounding attention and engagement, or the lack thereof, there has never been such an important role for the professional creators and curators of high-quality content.
This means there are huge opportunities for creative agencies that produce really great, high-quality, well-finished work rooted in real consumer insight. Unfortunately, there are more agencies than work of this kind to go round and latterly there have even been reports of advertisers inviting media agencies to pitch against creative agencies for their creative accounts, some within the same holding group. Where on earth is that going?
What is quite clear is that media agencies are sharp, highly-adaptable businesses whose models have evolved far beyond many of their clients’ imaginations and awareness, especially in the digital value chain. (I know, it’s a shit term but nobody has come up with a better one yet so we have to live with it.)
Margins in ‘digital’ are an order of magnitude greater than in legacy media channels, delivered through multiple intermediaries, many commonly and or/mutually-owned. And all this has arisen without the advertiser clients’ permission and has now reached worrying scale.
So to paraphrase The Killers, the big question every advertiser should ask their media agency in 2015 is ‘are you agency or are you reseller?’
This is not about the smokescreen of financial principality, but about definitions. In the language of our industry, I venture that an agent works for and is funded by its clients, whereas a reseller trades in things it has committed to (i.e. aggregated volume commitments) and/or bought (i.e. arbitrage).
How can an agency that trades in bulk and/or commits to buys in advance offer its clients the channel-neutral counsel they should rightly seek? It can’t, because it’s already committed, or as we have seen this year, sometimes dangerously overcommitted.
While I’m here, we’ve seen some cracking use of English this year, with the subdivision of the word transparency! It is used simply to mean (advertisers’) visibility of the financial undercurrents which drive their agencies’ media selection and deployment. But now we have ‘transparent but undisclosed’, which seems to mean ‘you can look so far but no further’. Doubtless we’ll see yet more semantic cleverness in this space in the future.
Recent initiatives emanating from the agencies’ body, the IPA, which aim to reclaim the ear of the most senior client executives across disciplines – ‘Adapt’ and latterly ‘Know The Value of Media’ are strategically and narratively spot on. But I feel that they will founder while the messengers continue to appear to have their hands in the tills.
A more welcome development is the translation of transparency into the consumer space, as in “Is it clear that this is a commercial communication I’m seeing?” This is a welcome development – surely no reputable advertiser should be trying to gull a viewer surreptitiously?
Likewise, there’s now much more airtime and space to fill than there is high-quality content, so while the future remains uncertain for the also-rans, a great opportunity remains for premium publishers and broadcasters.
Yet quite a few media owners, even big and powerful ones, are privately expressing concerns about how far things have gone, and how agency group business models have come to favour digital channels beyond the value they have yet to prove.
Talking of which, the industry needs to do lots more work to correlate and calibrate premium advertising inventory against the metrics of engagement, viewability, brand safety – and now fraud. It would be great – not to say just – if premium, professionally-curated inventory could be convincingly shown to be both safer and more effective for brands. Critically this analysis should include all inventory, including the stuff that is arbitraged by some agency groups.
Such information should be rigorously conducted by the industry-verified content verification providers (five so far) and hopefully orchestrated and published under the aegis of the Internet Advertising Bureau. It could also give the lie to whether it is indeed right to point the finger at procurement pressure as the reason for excessive use of non-premium online inventory through aggregators, exchanges and blind buys, whether real-time or not.
Finally, we’re seeing some serious challenges to the objectivity of the metrics on which trade is based. National newspapers’ withdrawal from the National Readership Survey and subsequent tender for a new survey suggests change is likely and – hopefully – positive. Web standards are diverging from circulation metrics at ABC, which is probably overdue and a good thing.
A challenge to the objectivity of a key input in out-of-home research has passed – for now.
Online audience research remains somewhat stunted by underfunding and mobile, tablet and multiplatform measurement, as well as the aforementioned viewability and non-human traffic all continue to present big challenges. Thank goodness, then, for stability and orderly progress at BARB and RAJAR which serve TV and radio respectively.
Back to my opening premise, change may be good but you can also have too much of a good thing.
And to round off 2014, if anyone is planning on taking themselves too seriously over the Christmas period, here’s a great online resource.
Happy holidays and a preposterous 2015 to you all.
Bob Wootton is director of media & advertising at ISBA.