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Can an agency win a media pitch without discounting rates?

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This post is by Darren Woolley, Founder of TrinityP3With 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.

In a market place obsessed with prices and rates, it appears that unless you can win the race to zero as a media agency, you have no chance of winning. But in actual fact, if a marketer is willing to give up this one dimensional obsession with media rates and starts focusing on the performance of their media and the value of their media investment, then media agencies have a huge opportunity to win business without playing the media rates game.

The reason I say it is because of the Golden Rule. That is the person with the money makes the rules and in this situation the marketer has the budget and so they get to set the rules by which a media agency is selected. If the final selection criteria is, “How cheap can the agency deliver media?”, then there is no way a media agency can succeed unless they play by those rules set by the marketer (or their procurement team).

But lets say that one day a marketer wakes up to the fact that they will only ever get what they pay for and decides that media value is more important than simply the lowest media rate, what then?

It will then depend on what the marketer and the brand see as value. There are so many ways media agencies can deliver value to a marketer and their brand. In the pitch process it would simply be a matter of finding the agency that delivers the right type of media value.

So what type of media value can media agencies offer?

Content

Media agencies have access to a huge amount of existing content through their media owner relationships. For those marketers pursuing a content marketing strategy, the right media agency is in a prime position to access high quality and desirable content. They can also assist in bringing the brand and the right media owner together to create new content specific to the brand’s needs.

Owned, Earned and Bought

The right media agency is able to provide a marketer and their brands with specific, data based strategic advice on how to measure, manage and maximise the media mix across all three, rather than the often conflicted advice of separate agencies.

Data & Analytics

Media agencies not only have access to huge amounts of customer data through their media partners, especially on-line media and publishing partners, they also have the capabilities to integrate this data with the brand and company data the marketer holds, into a DMP to extract customer insights and inform creative and channel strategy to deliver greater effectiveness.

Customer Insights

Media agencies are using rich sources of customer behaviour data to identify customer behavioural trends and to extract specific category and brand insights based on the data available to them from an extensive range of sources.

Performance Media

All of this leads to the ultimate bottom line in media, which is the focus on the performance of the media investment in driving changes in consumer behaviour leading to either leads or sales. The increased focus of media owners and media agencies on the consumer path to purchase and the availability of technology to be able to track and measure the effectiveness of the media channel and the creative is making media a performance investment.

In a pitch, media agencies are often confined to delivering their expertise in a narrow cast of media planning and buying. Yet media agencies are well positioned in the roster to provide a much broader range of media value beyond simply selecting and negotiating media at the lowest possible cost.

If marketers are open to exploring the value in their media process, the media agency can be measured on how well they are able to deliver across all of these areas of value, rather than just cost of media.

The ultimate expression of this is when the media agency is able to link their own remuneration with the delivery of this media value (not cost) for the marketer and the brand. Instead of simply recovering the cost of providing the media services the media agency in this case is willing and able to enter into a fee arrangement linking the delivery of the agreed value to their own remuneration. This is proof of their commitment to delivering value, rather than just cost recovery.

Unfortunately, too few marketers are in a position to be able to remunerate their agencies on the basis of performance, because they are managing a marketing budget, rather than contributing to the P&L of the organisation. Instead the marketer may opt for paying the agency a bonus on top of their fee instead.

Whether the payment by results is accepted or not, the offer to be remunerated this way is a tangible expression of the agency’s focus on delivering value. But ultimately this will only be successful if the marketer is in a position to not just identify the value offered, but to value it in the first place. Which sadly, many are not. Until then, agencies will continue to complete on rates for the marketers who know the cost of everything and the value of nothing. Including possibly their own brand they are managing.

First published on Mumbrella Asia October 28, 2014

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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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