This post is by Darren Woolley, Founder of TrinityP3. With his background as analytical scientist and creative problem solver, Darren brings unique insights and learnings to the marketing process. He is considered a global thought leader on agency remuneration, search and selection and relationship optimisation.
The issue of media transparency has got to the point where the World Federation of Advertisers has had to develop a Media Transparency Index. Yet many advertisers appear to be avoiding the issue of media transparency hoping it will either go away or someone will fix the problem.
The fact of the matter is this is an opportunity for advertisers to actually move the focus away from the cost of media to the value of their media investment and then to take steps to ensure they enjoy an unfair share of the media value in the market place. The first step as I point out here is to recognise it is happening and then to work to define media value and get more than your fair share working with your media agency.
Who is your media agency really working for?
They plan and buy your media and you pay the bills, so it is logical to say it is you. Right?
But what if you found out that increasingly your media agency is getting paid by the media owners they are buying your media from?
You would want a cut of the action. Right?
But it is not that straight forward.
You see what is happening is when you brief your media agency to buy media you are paying them a fee which is usually equivalent to less than 5% of the media spend.
They in turn go to the media owner who can offer them up to 30% in most cases as a discount of rebate. And in the case of digital up to 80%.
Now this can be passed back to you as a discount or added value to you or they can pool it into the total spend with the media owner for all their clients and get even more value back.
This could be in the form of cash rebates for the total spend.
Or credits or free media inventory they can sell on to other advertisers.
So why do the media agencies do this?
It is not because they all want to. But if one does it they all have to do it.
You see the problem is that increasingly advertisers choose the agency with the lowest costs. So the agencies have had to cut their fees to win business. But to maintain their growth and profits they have had to turn to the media owners to subsidise their revenue.
The end game logically is that you will get your media planning and buying for free. Not a bad deal really. Or is it?
You see, it means the agency services and advice will be paid for by the media owners selling the media.
And who really wants that? Do you?
If not, let us know. Because at TrinityP3 we can help you ensure your media investment is delivering the value you deserve. Not just costing you the price you paid.
So are you getting the media value you paid for or not? How do you measure media value? Or do you think price is still the best measure? If so, is it CPM or discount or how do you measure price and value? I am interested to know because it appears to vary so much from advertiser to advertiser.