Tag Archives: IPA

Media Agencies on Edge as Management Consultants Take Aim

1 Jun

Contract SigningIt came as no surprise to anyone in the industry when Accenture recently announced the launch of its programmatic ad unit. After all, weeks before Accenture had completed the acquisition of Meredith’s digital media unit MXM. Further, over the course of the last few years many of the large management consultancies, including Accenture, had acquired creative, design, digital, CRM, Social and full-service agencies as they looked to expand their presence in the marketing services sector.

The row over Accenture’s announcement, at least within the agency community, was focused on its Media Management practice and the work that they do globally in the media auditing and agency review space. The argument proffered by agencies and their associations, specifically the 4As and the UK’s IPA, was that it was inappropriate for Accenture to provide media auditing and search consulting services and programmatic media buying due to the potential for conflict of interest. In short, the agencies expressed concern that Accenture would utilize the data that is accesses in its media management practice to inform its work in the programmatic buying area.

Many would argue that the “conflict of interest” defense raised by the agency community rings hollow. This is due to the fact that Accenture and other management consulting firms routinely implement firewalls and processes to separate and protect data from one client or practice being co-mingled or misused intentionally or not by another.

Further, the agency community has had its share of “conflict of interest” challenges in the recent past ranging from its acceptance of AVBs to media arbitrage to ownership interests in intermediary firms not disclosed to clients that have served to undermine their credibility and the level of trust clients are willing to afford them. Thus, while Accenture’s announcement may be a sensitive topic for agencies, clients will likely have little concern.

Let’s face it, the world is changing and the media landscape has become more complex thanks in large to the growing impact of technology, accelerated levels of media fragmentation and fundamental shifts in consumer media consumption habits. Marketers in particular have become more highly focused on the effective use of data and insights to better target select audiences, geographies, behaviors, etc. Thus, organizations looking to boost their performance and to optimize their marketing investment, are seeking partners that can provide holistic, objective, strategic insights to guide their decision making.

Management Consultants are well positioned to provide the requisite marketplace, competitive and consumer assessments along with strategic recommendations and tactical implementation support across the evolving marketing funnel. Global in scope, the large consultancies have hundreds of thousands of employees, serving in a variety of specialized practices that can be tapped to work with marketers in the identification of problems and opportunities and the pursuit of strategies to achieve their business objectives. The addition of programmatic media capabilities to encompass planning and buying is a logical extension of the consultants service offerings.

Media agencies were long the profit engines for agency holding companies and the onset of digital media and the meteoric growth of programmatic buying represented a boon for media agency margins. Unfortunately, revelations about certain buying practices and growing advertiser concern over the lack of transparency surrounding their digital media investment ushered in a period in which advertisers began to actively evaluate new media agency partners, tighter client-agency contracts and new digital media models. It should be noted that among the new models that advertisers have pursued has been bringing aspects of the programmatic media buying process in-house, often with the counsel and assistance of management consulting firms. These trends have allowed the consultancies to curry favor with CEOs and CMOs and to expand their toe hold in what had been space traditionally dominated by ad agencies.

Given the size of the global programmatic marketplace, measured at $14.2 billion in 2015 and estimated to be $36.8 billion in 2019 (source: MAGNA Global, June, 2016), it is easy to see the appeal for the management consulting firms in general and Accenture in specific. As an aside, the market potential in this sector dwarfs the size of the media auditing and review market by a wide margin.

The media agency community would best be served by focusing on what it can do to leverage its position of strength to protect its share of the media planning and buying business. Time spent focused on “conflict of interest” claims as a defense against incursions from consultants or other non-traditional competitors will likely garner little support outside of the agency community and will therefore not be productive.

 

 

Strategic Sourcing and Vegetarian Haggis

19 Feb

Guest Article by Katherine Wang, Senior Project Analyst at Source strategic sourcingOne Management Services, LLC

How would you describe strategic sourcing and procurement? Source One’s company website demonstrates, for instance, that a variety of solutions and services are involved in the day-to-day responsibilities of a specialist in this growing field. I, for one, tend to prefer utilizing the terms “consulting” or “subject matter experts” when explaining to others what I do to, in order to capture the multidimensional nature of my activities. Never have I heard of my work being described as “Vegetarian Haggis.”

When I think of Scottish-related stereotypes, I think fondly of things like rugged terrain, tartan, and James Bond, so I will leave out any negative comments about haggis until I try the dish. However, due to the nature of haggis being a hearty and meaty dish, Rob Guenette’s comparison of procurement to a vegetarian version* humorously captures the common frustration and ambivalence agencies often feel towards the division that handles the RFP, negotiation, and contracting processes.

A common point of contention appears to be the perception that the only objective procurement is concerned about is cost reduction, regardless of the shop’s creative ingenuity or type of work, and as a consequence, parties habitually develop unreasonable expectations of themselves and of their partners.  Another concern is the idea that procurement departments do not have a clear enough understanding of the sales and marketing industry to make the best judgment calls. Digiday’s interview with two digital agency leads indicate how their greatest concern is that procurement develops scorecards and “scientific systems” to evaluate shops and disqualify candidates for incorrect or irrelevant reasons. These perceived impediments are only exacerbated by the fact that pitch processes are lengthy and costly, and according to PRWeek, increasingly drawn out thanks to the procurement department’s increasing involvement in marketing-related decisions. When considering those factors, it’s no wonder procurement is as appealing to the agencies as vegetarian haggis is to Sean Connery (or anyone else for that matter).

Nevertheless, it is unlikely that marketing teams will exile the procurement division any time soon. Putting aside company regulations and bureaucratic hurdles, procurement is, as discussed by Alan Wexler, EVP of SapientNitro, and James Gross, co-founder of Percolate, utilized as the “investigative layer that takes the workload off the buyer when making a purchasing decision,” and help add accountability and structure to a company’s buying decisions. This is especially important when large firms with a multitude of divisions and products seek marketing services and are faced with a daunting number of choices from different agencies.

To allay the qualms engendered by the agency-procurement relationship and to emphasize the benefits that such a partnership would bring, I conclude with a few notes on best practices observed in the business. All paths point to how clear communication is integral to the process. Forbes’ recent exposition on the 2013 ANA Advertising Financial Management Conference in Scottsdale Arizona illustrates the gap as well as constructive links between procurement, agency and marketing teams. Brett Colbert of MDC Partner’s quip about procurement at the conference, “…It can’t just be about procuring or buying…. We have to move the conversation beyond savings, talk about value not price,” deftly sums up the ultimate goal. To meet this target and derive value from business engagements, parties should increase the flow of information to better comprehend each initiative’s needs.

Similarly, ISBA and IPA provide six useful principles to make the most out of an agency pitch. The lesson to be mastered sounds simple enough: procurement, agency, and marketing teams should work to ensure that there is effective communication and transparency among the three parties. Collaboration is important to understanding the ultimate objectives and nuances of selecting an agency that fits well, in terms of capabilities and chemistry, and to avoid using the RFI/RFP as a blunt instrument. As they say, “Quality, not quantity.”

To learn more about how strategic sourcing may bridge the disconnects between marketing teams, procurement, and advertising agencies and obtaining value, contact guest blogger Katherine Wang at kwang@sourceoneinc.com.  Katherine Wang is a senior project analyst for Source One Management Services LLC and a key contributor to the company’s sales and marketing services group. Her unique experiences and insights are leveraged daily as the group develops innovative and effective sourcing strategies for a client list of global leaders in industries including pharmaceutical, health care, and manufacturing. Source One Management Services is a provider of procurement services, helping clients with strategic sourcing and supplier management solutions. The company is based in Willow Grove, Pa. 

*A final note on vegetarian haggis: according to The Guardian, it’s actually pretty good, all things considered.

 

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