The world of rising prices and crap service

As an industry verteran, Jim Marshall believes there is no comparison with the past when assessing the expertise and service offered by today’s agencies. If only competition drove everyone in the same way…

This morning I sat on a train with no heating. Well it was BR or whatever they call themselves these days – National Rail/Southeastern I think in these enlightened times of privatisation. And of course my rail ticket has recently been subject to an increase at over twice the rate of inflation – and the parking charges at an even higher rate than that.

Initially I was weighing up the comparative benefits of a normally overheated carriage, causing a slightly pungent smell of harassed commuters along with an extremely pungent stench of inadequately cleaned loos, and a freezing compartment, with a more pleasant atmosphere but causing minor frostbite to hands and feet.

In fairness though they do offer consistent customer experiences… i.e. consistently crap with consistently increasing prices. Then I started to think about media and the prospects for this year – I’m never off duty!

In the old days (back in the 20th century), media pricing was regarded as being synonymous with rampart inflation – a bit like National Rail. Although I can’t think that client servicing ever sank to the depths of train travel, many of our advertiser customers regarded the media owners (and agencies to some degree) as arrogant, inflexible and conspiring to inflate prices.

And in truth there wasn’t always a lot of science applied to price increase estimates. It was often tempting to simply apply the ‘around 10 to 15% inflation factor’, which spookily proved to never be that far out. But this was when there was more demand for the best media than there was available supply.

It’s a bit different now. Most estimates put the year at a revenue growth of between 0% and 2%. But media inflation overall should be around nil again. This has been the same story for a number of years… in fact across most of the first decade of the 21st century.

There are of course some good reasons for this, not least the growth of a whole raft of new media opportunities, from new television channels to the internet. In fact we’ve moved from an over demanded/under supplied media market to the exact opposite now. So it’s been a period when advertisers’ media prices have significantly reduced in real terms or, in 20th century parlance: ‘They’ve never had it so good’.

But what of customer service?

There have been a number of recent pressure points. On the client side, concerns over trading mechanisms (transparency, agency deals, volume rebates, etc) and, on the agency side, the need to invest in new services/technologies and the inevitable pressure on margins in a market, which is showing little overall growth.

Clearly the debate on these topics can, and inevitably will, roll on incessantly. But, for me at least, the ‘big picture’ provides a very clear conclusion – advertisers have enjoyed ever improving value and contractual terms and the better run media agency groups have maintained healthy profit margins.

But also in my view, there has been a phenomenal improvement in the quality of media agency expertise in a whole raft of new and existing services and expertise. We were always pretty good at standard media planning and buying but we now provide a far higher quality service in account handling, research, analysis, strategy, integrated communication solutions along with of course  expertise in online media including display, search, affiliates, social and the fast growing mobile sector.

Being a veteran of the industry has many disadvantages for me – it of course means I’m old, tend to repeat myself, etc – but it does allow me to make reasonably objective comparisons with the past.

In my view, there is no comparison with the past, the quality and expertise of modern media agencies are way in advance of the past, particularly over 10 years ago.

How can this be? I think it’s mainly to do with competition. Competition is clearly one of the factors that regulate pricing, but arguably more importantly it is the greatest motivator for quality of customer service. (As we all know, it doesn’t matter if one supermarket chain has the best choice, most convenient location and the lowest prices, if the person on the check out tells you to “f**k off”, you will end up shopping somewhere else.)

As any media agency will tell you, accountability and competition are embedded in the culture of our business. Actually to the point where I feel that there are too many media pitches and they occur too often… but then I would say that.

So this year – and irrespective of whether media prices stay the same or go up or down a bit  (let’s be honest no-one really knows at the moment) – what we can be certain of is that the best and most successful media agencies will continue improving both the quality and depth of the resources and expertise.

Pity I can’t say the same of Southeastern, but then why would they, they don’t have to compete.