ANA Marketing Financial Management Conference, Boca Raton, Florida – Day 3

The focus is on profitability and margins not costs and price today with a view of the industry from Wall Street by Brian Wieser, Pivotal Research and a panel discussion on Media Trading Desks and a discussion on Media Audits facilitated by the Media Audit Council.

Media auditing moves from a stick to a carrot as advertisers get smarter

Wall Street

It appears that from a Wall Street perspective there is no agency income crisis with most of the holding companies recording record profits in excess of the market growth. And from an investors point of view this makes the holding companies generally good investments, because Wall Street believes that no matter what the price the agencies are able to maintain and grow margins.

After all Marketing should and is focused on cost or price reduction, not the current industry obsession with the profit margins of the suppliers.

While agencies continue to find ways of meeting marketer expectations on quality and price and at the same time maintain and improve margins the industry is performing well from an investment perspective.

There are different perceptions of the various listed holding companies:

Media Trading Desks

There is a lot of discussion about the lack of transparency in regards to media trading desks and this has lead to marketer and procurement suspicion about the margins being generated for the agency networks, especially as many of these trading desks operate at the holding company level.

The panel were explaining that if the focus moves from the business model to the benefits, marketers are in a better position using the Trading Desks because they deliver to marketers greater efficiency in buying, data analytics and insights on individual audiences, and overall better campaign performance.

They also highlighted that rather than benchmarking the business model and profit margins, they should compare the performance of the Trading Desk against the inventory price in the market.

And why do the Trading Desks exist at a holding company level? Because in most cases the investment in technology to create an efficient and effective analytics, management, buying and optimisation system can only be justified at this level of volume.

Media Audits

Media Audits Council is a not for profit organisation  funded by the major global media auditing companies with the charter to develop best practice in media auditing, an area of consulting often shrouded in mystery.

The panel they bought together included global companies like Pfizer, Kimberley-Clark, Bayer and Nissan.

The focus of the panel was the role of media auditing in driving performance. Rather than focusing on simply measuring past performance, all media audit users found the bigger benefit was in the lessons and process improvement to be applied going forward.

While many of the panel saw the benefits linking agency remuneration to the audit performance, they all recognised that the bigger opportunity is driving the media value obtained over the market, rather than limiting agency payment. Making the process a big carrot rather than the traditional stick auditing has previously been.

Focus on price rather than cost

So overall there was a positive change in focus today from how much does advertising cost, looking for ways to measure the value delivered.

Of course the next step is to start to recognise the value created and to reward for that. But maybe that will be next year’s or perhaps the year after.

The ANA Marketing Financial Management Conference is the only event of its kind. It brings together top marketing finance and procurement professionals from the client side with agency CFOs and other key industry stakeholders interested in efficiencies, cost savings, return on investment, and delivering greater value to organizations.

This post also appears in AdNews

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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
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