Could media agencies become the movie studios of advertising?

Having undertaken a number of media reviews for financial services clients, it has become obvious the diversity of the category and how limited the media agency options there are in the market.

We were reflecting on this the other day and observed that while media (channel) agencies continue to consolidate into fewer, larger companies, the (content) creative and digital agencies continue to fragment and diversify.

A prime example of this is that while we have seen Mitchell & Partner acquired by Aegis and Bellamy Hayden folding in to Naked, some of the more high profile and exciting content agencies such as Droga5, Three Drunk Monkeys, Happy Soldiers have all formed in the past 3 – 4 years with senior agency staff leaving the larger network agencies to do this.

So reflecting on other creative industries, like we did at the Spikes Asia Workshop, I created this hypothesis that “media agencies could become the movie studio of the advertising industry”.

Why?

Media Agencies are consolidating like Movie Studios did

The movie industry saw a consolidation of studios to now a handful that dominate the global market. Many of them seen here. Likewise, media agencies have consolidated under a handful of holding companies.

The other thing is that as the movie studios consolidated they increasingly outsourced production to independent production companies and producers, while the studios increasingly focused on distribution, marketing and maximising the commercialisation of the product through DVD, downloads and broadcast rights.

Content producers, be that film companies or agencies have fragmented

There has been a rapid increase in independent film production both in the number of producers and volume of work. This has been driven by technology, increasing the number of channels and therefore the demand for content and reducing the cost of production allowing easier entry into the market.

There are certainly established brands in production like Dreamworks SKG, Pixar, Jerry Bruckheimer and Miramax. And there are also many more up and coming producers as well.

Likewise advertising entry costs for content production has also decreased, while media buying especially has a high cost of entry. And the content category is also dominated by major content brands like BBDO, DDB, JWT, Young & Rubicam and Saatchi & Saatchi. But in every market there are an infinite number of up and coming content producers.

Acquisition executives from the studios commission or find and buy content

Rather than creating their own content, studios outsource this either be commissioning projects or by scouting and acquiring the rights to content. Could it be that media agencies could have this role for advertisers?

Instead of the marketer having to find and manage a number of content producing agencies, they would work with their media agency (and it is almost always just the one agency) to determine the right communications strategy for content and channel and then the media agency would acquire the right content producing resources for the project?

Why would marketers consolidate campaign management with media agencies?

There are quite a few reasons for putting the media agency central in the communication strategy mix:

1. Marketers usually invest more money with their media agency than any other supplier and in return the media agency proves financial responsibility and trust.

2. Media agencies have access to more market and consumer research than any other supplier through industry subscription, proprietary research and media proprietor sources making them rich for insights.

3. With a move to built, owned and bought media, the media agency ultimately manages the true marketing assets.

4. There is usually only one media (channel) agency and yet there are multiple (content) agencies, so this is a natural focus for consolidating management responsibilities.

5. Media agencies are increasingly building content production relationships, either through their holding company, the media proprietors or strategic alliances.

But there are barriers

The biggest barrier to this is the fact that almost exclusively all of the media agencies are owned by the holding companies that also have extensive investments in content agencies. To transform the media agencies into the Movie Studios for the advertising category could come at the expense of many of the poorly differentiated and under-performing content agency brands. After all, the media agency should be recommending who is best for the job and who will deliver the results, not simply who is part of their network allowing them to consolidate revenue.

But nevertheless, an interesting model, don’t you agree?

Related Posts Plugin for WordPress, Blogger...

About Darren Woolley

Darren is considered a thought leader on all aspects of marketing management. A Problem Solver, Negotiator, Founder & Global CEO of TrinityP3 - Marketing Management Consultants, founding member of the Marketing FIRST Forum and Author. He is also a Past-Chair of the Australian Marketing Institute, Ex-Medical Scientist and Ex-Creative Director. And in his spare time he sleeps. Darren's Bio Here Email: darren@trinityp3.com
This entry was posted in media planning & buying and tagged , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.