got the right resource level?

With increasing complexity and fragmentation in media, marketers are rightly questioning the level of resources in their media agencies in the face of increasing demands for resources from the agencies. In this edition of P3 e-news Stephen Wright discusses what you need consider in reviewing the level of resourcing for your media agency. In this P3 e-news: – seting the right media resource – P3TV workshops – BOOK NOW – review your media resources – looking for more information?

setting the right media resource

Once upon a time media agency remuneration was as simple as paying a media commission. Of course, much of the 10% media commission and service fee went to pay for the creative agency.

Then unbundling came along and media accreditation was dismantled and suddenly the media commission on media planning and buying fell through the floor with unconfirmed reports that agencies were planning and buying media for their clients for as little as one percentage point of the media spend.

Today, some advertisers still pay a reduced rate commission, but increasingly media agencies are being remunerated for resource cost multiplied by overhead by profit margin. But how does an advertiser know if they have the right resources and retainer fee?

The resources depend on media spend

In most cases, the more you spend on media the more resources you need to plan and execute that spend. But the relationship is not linear. That is, doubling the media spend does not necessarily double the resources needed.

That is why advertisers who base the media agency remuneration on a percentage of spend may be paying too much or too little depending on their total media spend. And if you lock in a spend at a lower level with a commensurate commission and the budget increases, you could end up remunerating the agency more than is necessary.

The resources depend on media mix

Generally speaking, different media types have different resource requirements. This is driven by the typical spend budgets associated with each media, the number of options available, the complexity of different media types and the level of research associated with each media category.

Each of these will impact the resource requirement and therefore the media mix of these various media types will impact on the resource level and mix. For example, taking the same budget and spending it primarily on one media, such as FTA-TV, would require less and different resources to spending the same budget on a multimedia campaign across TV, newspapers, cinema, magazine, outdoor, radio and online.

In fact an increasing impact on the overall equation is the proportion of spend going into online, where very different staffing levels are required to deliver well in this critical area.

The resources depend on the strategy

In response to the dismantling of the media accreditation system, most advertisers negotiated the remuneration rate down to the point where it impacted the quality of the planning and to a lesser extent the buying.

But advertisers that require a high level of strategic thinking because they have difficult or unusual target audiences are realising that quality strategic resource cost money. In fact, with the rise of channel planning and the increasing media complexity, advertisers are investing in securing the right quality and quantity of resources to provide the required level of strategic thinking.

The right resources depend on the advertiser

So the right resource level and mix is dependent on the total spend, the media mix and the advertiser’s communication strategy. In other words there is no “one size fits all”.

For instance, an advertiser with a $50 million dollar budget, a broad based, mass target audience, a strategy focused on maximising awareness using FTA-TV would require a very different resource mix and level to an advertiser spending $7 million to reach a range of niche audiences, to drive through a protracted buying process using a mix of print and online media.

P3Media has the benchmarks, experience and expertise to make sure you have the right resource mix at the right cost. To find out if your media agency remuneration is providing the right resources, contact P3Media in Melbourne 03 9682 6800 or Sydney 02 9279 4997 or by email on media@p3.com.au