Rebategate sheds a light on the (literally) big issues at media agencies

Greg March is CEO of independent media agency Noble People.

As you’ve heard by now, the ANA released a damning report that claims media agencies have not been transparent about how they make money, how they behave, or whether an advertiser’s objectives were the sole basis for media recommendations.

These allegations have prompted outrage and commanded attention in the press. Agencies are up in arms, naturally.

But buried within the report is a different matter, one that’s equally thorny and complex to decipher but certainly worth the attention of the marketing community: The report outlined how the scale and nuance of the holding companies enable a lack of transparency.

This point manifests itself in three ways: sister companies not bound by terms signed by their counterpart agencies, holding companies extracting equity stakes in return for client media spend, and access for media vendors being withheld or granted based on arrangements with holding company trading desks.

It’s easy to see how scale would make arrangements like this easier to hide or rationalize. That said, let’s try to examine what good scale can bring.

Scale is generally associated with the ability to bring clients lower rates. It could. But that equation is fast-fading.

Scale is also often validation: “We’re big, they’re big. If other people choose them, they can’t be that bad.” This is also the reason tourists come to New York City and eat at the Olive Garden.

Scale involves international networks that can work seamlessly across the globe. Unfortunately, people competing with each other inside the same company can be just as dysfunctional as people competing from different companies.

Now let’s examine the other side of scale.

Thanks to the ever-growing amount of media that exists in the world, someone can always get a lower rate for crappier media, which there is no shortage of. You’ve got a thousand channels (just on TV) and a range of digital and physical media, the bulk of which is actually never even seen. You know it’s bad when 50 percent of a banner is seen for as long as one second before agencies declare them “in view.”

This stuff lives in and is moving toward online auctions, and scale doesn’t bring much to the table in an auction.

The pricing of truly scarce media — live sports, the Oscars, the premium billboards, the cultural campfire moments and spaces – has been skyrocketing. The media sellers know it will sell out. So how much is buying more going to help you?

Another aspect that scale brings to the table is meetings. Lots of meetings involving a bunch of people responsible for pieces of a “thing” without an understanding of the whole “thing” itself. Presumably, the appeal is status. But what it amounts to is 19 people sitting on the phone for 45 minutes to read to one another the notes they wrote down earlier.

And why so many people? Because most of them are assistants out of school managed by planners who after two years need to become supervisors or they will quit. And those guys with three years experience can’t manage four people without some oversight from an Associate Director. Otherwise, the Group Director will have to do work that is below their level. Meanwhile, the most seasoned, inventive, and experienced people spend 17 percent of their time across 10 clients.

Then there’s process. Scale loves it some process. And as you scale, you need people that don’t do the work; they run the process; they fix the process; they do process education.

And don’t forget big data. How many truly transformative case studies of big data have we seen? Oceans of time and money billed and spent in the name of getting credit for a 3 percent increase in something that we’re not even sure wouldn’t have happened anyway.

I’ve spoken with many clients, many media agency peers, hired many employees. What I’ve never heard is, “Ya know what really transformed the marketing of that company? Those rates, that process, that media mix model!” Here’s a thought: Maybe scale makes for shittier media agencies.

Big or small, all agencies should ensure transparency for clients. Maybe once we strip out the added rebate revenue, the success and failure of media agencies will be tied to how good their people are.

Imagine that.

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