Why The Biggest Threat To Media Agencies ISN’T From Other Media Agencies

Why The Biggest Threat To Media Agencies ISN’T From Other Media Agencies

In the third of a four-part series aimed at threats and opportunities for agencies, regular B&T columnist, Robert Strothfeldt from Strothfeldt Consulting (pictured below), argues that disruptors to agency land probably will come from where you least expect…

Competitors:

There are those who argue that advertising itself, as opposed to specialist practitioners, is facing future extinction. Advertising is a service that will always exist, though continue to evolve at an ever increasing pace. The question is will this service in future be offered by specialist practitioners, or will fragmentation result in different types or styles of advertising/communications being offered by a diverse range of businesses for whom a particular area of communications is part of a much broader suite of services and products?

user_9522

Not that long ago, it was pretty simple “advertising agencies did advertising.”. But with rapid changes in technology introducing new media and disciplines, advertising/communications is now so incredibly broad, identity is a vexing issue i.e. what services should an advertising agency now offer?  This is further complicated by having disciplines that are simultaneously relevant to a number of what were once distinctly different areas of specialty e.g. Big data, whilst providing highly relevant insights for communications, also provides information relevant to most areas of business operations.

Arguably, the greatest threat to advertising industry as we know it (creative and media) comes from both firms who traditionally have provided clients advice and services not associated with marketing/communications/advertising and what can broadly be termed, the media. The previous articles looked at the threats of identity and credibility –  issues that have helped open the door for competitors.

Competitors could be grouped into 3 categories.

Advisory Firms:

By far, the biggest threat to our industry. And though the threats these firms pose are only now becoming obvious, they have been quietly working away at providing services which overlap with ours since the late 80s and early 90s.

Most would have heard of The Big 4 Advisory firms – PwC, KPMG, Deliotte and Ernst & Young. Though I am not sure if many know of their origin.  The four firms all started as Chartered Accountants. They were originally the Big 8, in no particular order:

  • Arthur Andersen
  • Coopers and Lybrand
  • Deloitte Haskins and Sells
  • Ernst and Whinney
  • Peat, Marwick, Mitchell
  • Price Waterhouse
  • Touché Ross
  • Arthur Young

This became the Big 6 and ultimately the Big 4.

We had Arthur Andersen (who became extinct with WorldCom) as a client in the mid-nineties, and the question they (and their competitors) asked most was “What is an alternative title to Chartered Accountants?” The descriptor was too limiting. They wanted to increase their service offering of traditional accounting. Their core services were tax, audit and MIS (Management Information Systems). By the late 80s, MIS was had become a core competency – they saw the technological landscape changing long before agencies did. They were the people who put together stock exchange floats. Did due diligence for mergers and acquisitions and most importantly, had access to the most sensitive (and useful) of client data and the ear of the CEO and the board. They recognised that information was gold, they had access to the best of it and as they were subject to a proper working professional body, were seen as serious, trusted business advisors.

When we talk about strategy, it is in a relatively narrow capacity i.e. marketing and communications strategy. The large accounting firms, as they were known then, advised on a much larger and complex level. Through a series of mergers and the addition of services, the Big 8 evolved into The Big 4 Advisory Firms.   They have voracious appetites for new work and fees and see our area wide open for rape and pillage.

Rather than just accounting, they provide strategic business advice and this straddles many disciplines.  The advertising industry has only relatively recently been preaching integration.  The Big 8/6 saw the future of integration before the digital era started. Recently PwC released a study on advertising, concluding that the average creative director was a white, middle to upper class male who lacked the empathy to drive communications in what is now a diverse society.

A former accounting firms telling us about creativity. WTF? That should set alarm bells ringing throughout the industry.

No agency (creative or media) has either the credibility or CEO/Board access as any of the Big 4 and you can add Macquarie Bank, UBS, Goldman Sachs, Credit Suisse etc. The latter have sophisticated in-house media analysis capabilities and provide regular reports to your clients.

A recent report on advertising spend, market shares and predicted future trends in sports betting was released by UBS. (An investment bank). Not that long ago, the natural order would be that such research be conducted by a Carat or Group M, a media specialist.

It is not only the Big 4, there are many second tier advisory firms and what were once called management consultants such as McKinsey and Accenture who are moving into what has traditionally been our area of speciality.

If PwC, KMPG. Deloitte or Ernst & Young decide to open a creative/content division, then the threat level goes through the roof. That would allow them to provide a fully integrated business advisory service from financial engineering through to communications.  A business is not a series of discrete entities. An advisory firm with a marketing and communications arm would complete a fully integrated service.

Further complicating matters is the fee structure, the final subject in Existential Threats. Media agencies still draw a significant proportion of their fees through commissions. Sales people are paid by commission and sales people do not provide objective advice. We talk about innovation and rapidly changing technology, yet use revenue models that were outdated before the digital era began. (In fact, haven’t changed much in over 150 years).

The Media

Last week News Limited launched a new service for advertisers. The report was full of buzz words that made it difficult to understand exactly what they were saying (but it was being done “at scale”.) It is a content play, (which works for food and home renovations), but the crux of the issue was that the media are going direct to clients more and more frequently. They don’t need an “agent” to tailor make programming (oops sorry bespoke programming).  Think TV was developed primarily because media agencies had become so besotted by Google and Facebook, their efficacy was not being accurately and objectively put forward to clients.

And don’t think Google and Facebook won’t do the same. They have paid far higher commissions to gain access to clients and are now going direct in many instances. They don’t pay 20% commissions because they nice people. It is a long game and they are winning.

When you read comments such as “Facebook is the greatest advertising medium of all time”, it does set a new benchmark for super salespeople. Facebook “sells” their ability to micro-target. We now see traditional media, in particular TV, responding with the advantages of “positive wastage”. This is the first time I have seen wastage used as a positive. Yes, Facebook can target down to levels unheard of with traditional media, but what they don’t mention is the lack of impact these ads have – small screens, mobile, interrupting two conversations etc.

Then there is social media. Anyone who has read my columns would know my opinion of the effectiveness of social media for business. (Apple did OK without social media). A great research tool, no debate. But as an advertising medium, way over-rated.

Search is by far the most effective of all online advertising. It is analogous to Yellow pages. If you are a plumber, electrician etc., it is a must. But if you are a strong, highly desirable brand, it is more effective for finding your nearest outlet, rather than finding your brand/business.

Investment Banks & Specialist Operations

As previously mentioned, USB published a study on the betting market media expenditure and market share. They are not going to be the threat of an advisory firm and offer the full suite of services in direct competition to agencies, but will (in many instance already do) offer individual services in competition to specific areas of traditional agency operation.

To say that advertising has changed radically in the past 20 years and the rate of change will continue to increase, is stating the bleeding obvious. As an industry we must change and adapt, but in doing so, stick to what we have always done – and this can best be described as Persuasion. Whether the goal is to persuade a consumer to trial a new product, advise on and persuade relevant people to use government services, persuade consumers that a client’s business is eco-friendly – though reasons for engaging people are large and diverse, the primary task is the same. Persuasion at every consumer or audience touch point.

To survive, agencies are either going to have to take the WPP route and put together a large organisation made up of firms who specialise in the wide array of disciplines that now make up advertising, or specialise in one particular (or a couple of complimentary) area to a level of excellence that no operator, whose core business is not communications, can approach. (For smaller specialist operators, strategic alignments with specialists in other communications fields will be critical as the need for integration increases.)

Never before has our industry faced such diverse and intense competition – there are so many who want to eat our lunch. But lunch is something that any good advertising person has always excelled at.




Please login with linkedin to comment

Designworks Media Partners Robert Strothfeldt

Latest News

Mark Tompkins Adds Creative Power To Enthral
  • Advertising

Mark Tompkins Adds Creative Power To Enthral

Storytelling agency Enthral has bolstered its creative offering with the addition of Creative Director Mark Tompkins. Tompkins joins the agency with more than 20 years of experience and a who’s who of agencies in Australia and London on his CV, including TBWA, DDB, Clemenger and Ogilvy. Until now, all of Enthral’s creative work has relied […]

Mat Baxter! Wippa! Tinder! – Epic Cannes in Cairns Sessions Locked In!
  • B&T Exclusive

Mat Baxter! Wippa! Tinder! – Epic Cannes in Cairns Sessions Locked In!

We’re just days away from Cannes in Cairns, Presented by Pinterest, and the few remaining tickets are flying out the door and it’s not surprising with the likes of Mat Baxter, radio host and 36 months co-founder Wippa joining the slate! Lead image L-R: Kat Dopper, founder and creative consultant at Heaps Gay, Queer Agency […]

Is Yoshi A Non-Binary Lesbian? The Good, The Bad & The Ugly Of Google AI Fails
  • Technology

Is Yoshi A Non-Binary Lesbian? The Good, The Bad & The Ugly Of Google AI Fails

If you’ve made a quick Google search over the last few weeks – and let’s face it, who hasn’t – you would have noticed a different feature appearing at the top of your search results. The Google AI search feature launched earlier this month, generating a clear answer based on information for each of the […]

TV Ratings (29/05/2024): Seven’s The 1% Club UK Tops Wednesday Night Prime Time 
  • TV Ratings

TV Ratings (29/05/2024): Seven’s The 1% Club UK Tops Wednesday Night Prime Time 

The game show, hosted by comedian Lee Mack, reached 1.51 million viewers with an average Total TV audience of 853,000. Ten’s MasterChef posted an average audience of 596,000, and Nine’s The Summit recorded an average audience of 558,000. The 1% Club also came out on top in average audiences across the key demos of 25-54 […]

Apple’s Latest Ad Makes Animators The Star
  • Campaigns

Apple’s Latest Ad Makes Animators The Star

A new minute-long spot from Apple spruiking its iPad Pro has made animators and their creativity the star. The ad features American actress Sofia Wylie on one piece of green screen footage, with three animators using the iPad Pro, with its new M4 chip, and the Apple Pencil Pro to create imagined worlds. The “Forest” […]

Majority Of Aussies Want Privacy Over Personalisation As Optus & Medibank Data Breach Fallout Revealed
  • Marketing

Majority Of Aussies Want Privacy Over Personalisation As Optus & Medibank Data Breach Fallout Revealed

Three-quarters of Australian internet users are more concerned about data security and privacy than receiving personalised services, such as advertising, a national consumer study by market research firm Honeycomb Strategy has revealed. Nine in ten consumers want transparency around how their personal data is handled, 72 per cent said a company using their data for […]

The Monkeys Nab Creative Directors From Goodby Silverstein & Partners
  • Advertising

The Monkeys Nab Creative Directors From Goodby Silverstein & Partners

The Monkeys, part of Accenture Song has announced the bolstering of its creative department, welcoming two new associate creative directors, ex-Goodby Silverstein & Partners creative team Lennie Galloway (L) and Thomas Gledhill (R). Galloway and Gledhill have been working together for almost a decade. They began their career at FCB New Zealand, winning Cannes Young […]

‘Life Is Too Short For Your Work To Not Have A Positive Impact On Society’: The Tall Planner, Kate Smither Chats With Fernando Machado
  • B&T Exclusive

‘Life Is Too Short For Your Work To Not Have A Positive Impact On Society’: The Tall Planner, Kate Smither Chats With Fernando Machado

Here, B&T hands the reigns to Kate Smither, also known as The Tall Planner, for an inspiring chat with her former colleague, legendary marketer Fernando Machado on the eve of his eagerly anticipated keynote at Cannes in Cairns, Presented by Pinterest. I had the absolute privilege and pleasure of working with the brilliant Fernando Machado […]

by B&T Magazine

B&T Magazine
Cristiano Ronaldo Tries To Resurrect NFTs With Binance Collection
  • Marketing

Cristiano Ronaldo Tries To Resurrect NFTs With Binance Collection

Thought we’d finally seen the back of NFTs? Well, think again as Portuguese soccer legend Cristiano Ronaldo and digital currency exchange platform Binance have launched a new collection of NFTs celebrating his career. The ‘Forever Worldwide: The Road to Saudi Arabia’ NFT collection offers fans new insights into the iconic locations that were pivotal in […]

Samsung Ads & Nielsen Study: Allocate 30% Of Total TV Budget To Streaming
  • Advertising

Samsung Ads & Nielsen Study: Allocate 30% Of Total TV Budget To Streaming

A new Samsung Ads ‘Behind the Screens’ study by Nielsen has revealed that advertisers can maximise reach and efficiencies by allocating 30 per cent of their Total TV budget to ad-funded streaming. The study demonstrates how advertisers can deliver greater impact among key demographics through a 70/30 combination of linear and streaming ads without increasing […]

Mindshare & Avid Collective Highlight Reef Conservation Efforts In New Pro-Bono Campaign For Citizens of the Reef
  • Campaigns

Mindshare & Avid Collective Highlight Reef Conservation Efforts In New Pro-Bono Campaign For Citizens of the Reef

Avid Collective has unveiled a new, pro-bono campaign for environmental charity Citizens of the Reef, as it works to promote the group’s efforts to conserve Australia’s iconic Great Barrier Reef. The campaign, which launches this week, is in partnership with Mindshare and supports the organisation’s annual Great Reef Census. Avid and its publisher partners provide […]

Dentsu: Australian Ad Spend Slowly Growing
  • Advertising

Dentsu: Australian Ad Spend Slowly Growing

Dentsu has predicted global ad spend to grow by five per cent this year, following “major shifts” in ad spend by geography and media channels across 56 markets with Australian spend growing, albeit slowly. The holding company predicts that $US754.4 billion ($AU1.14 trillion) will be spent worldwide by the end of the year, marking more […]

First Nations Art Takes Over oOh!media 3D Anamorphic Billboard In Melbourne’s CBD
  • Campaigns

First Nations Art Takes Over oOh!media 3D Anamorphic Billboard In Melbourne’s CBD

A new digital artwork by Gumatj artist and filmmaker Gutiŋarra Yunupiŋu from The Mulka Project in North East Arnhem Land will be featured on the Bourke Street 3DA billboard for one week only through a new National Gallery and oOh!media partnership. Transporting himself from North East Arnhem Land to Naarm/Melbourne’s CBD, Gutiŋarra Yunupiŋu’s Bäru Gurtha […]

News Corp Australia Restructures Business
  • Media

News Corp Australia Restructures Business

News Corp Australia has restructured its business into three divisions and will make a series of redundancies, including the departure of News.com.au editor-in-chief Lisa Muxworthy. The restructure essentially removes the roles of several senior editorial executives and centralises power along national lines. The Australian Financial Review reports that the restructure aims to save $65 million […]

Olympics Set To Lose Keys To Major Sponsorship Deal After Paris
  • Marketing

Olympics Set To Lose Keys To Major Sponsorship Deal After Paris

Reports out of Japan this morning suggest that Toyota will not be renewing its partnership with the International Olympic Committee after Paris 2024. When announced in 2015, the automobile brand’s deal was reportedly valued at $1.2 billion. The partnership extended across four Olympic Games and ended at the end of the 2024 Paris Games. Japanese […]

Foxcatcher Launches WorldView Retail, Predicting Customer Lifetime Value
  • Technology

Foxcatcher Launches WorldView Retail, Predicting Customer Lifetime Value

Foxcatcher, RyanCap’s data and technology business, has launched its new audience and activation product, WorldView Retail, to help marketers predict customer lifetime value. The WorldView Retail model predicts each customer’s lifetime value through behavioural segmentation and first-party data, allowing marketers to design more targeted journeys. Worldview Retail enables brands to maximise ROI and customer growth […]

LiSTNR & DataCo Technologies Partner To Accelerate Its Data Cleanroom Strategy
  • Advertising

LiSTNR & DataCo Technologies Partner To Accelerate Its Data Cleanroom Strategy

LiSTNR has announced a key partner to further accelerate its data cleanroom strategy with DataCo Technologies. The additional data cleanroom solution will allow advertisers to integrate their own databases with LiSTNR’s 1.95 million first-party database, which ensures campaign effectiveness and local safety and privacy compliance. DataCo Technologies is a leading home-grown, Australian cleanroom solution with […]

Canteen Australia Appoints UM As Media Agency Of Record
  • Advertising

Canteen Australia Appoints UM As Media Agency Of Record

UM Australia has been appointed as Canteen’s media agency of record, effective immediately. UM’s remit for Canteen encompasses performance and above-the-line media strategy plus planning and buying, with a clear objective to grow supporter numbers in order to reach more young people impacted by cancer. Andrew Clift, managing partner, (house of performance), UM said: “To […]

Anytime Fitness Launches “Find Your Fit” Audio Campaign, Via The Hallway
  • Campaigns

Anytime Fitness Launches “Find Your Fit” Audio Campaign, Via The Hallway

Anytime Fitness Australia and The Hallway have released a new audio campaign under the “Find Your Fit creative” platform launched late last year. The campaign, which runs on Spotify and targets listeners across Australia’s most popular music genres, introduces us to a cast of unique gym goers whose music tastes complement their workout styles. Directed […]

Spotlight On Sponsors: Eels Latest Deal Leaves NRL Fans Divided
  • Marketing

Spotlight On Sponsors: Eels Latest Deal Leaves NRL Fans Divided

The Western Sydney Wanderers have signed an epic new sponsor as they look to expand their inclusive competitions. Meanwhile, someone needs to tell the Parramatta Eels that renewing an old sponsor isn’t enough to win them a premiership again. Welcome back to B&T’s Spotlight on Sponsors series, where we break down all the major sponsorship news from […]

Paramount’s Beverley McGarvey On Diversity, Authenticity & Respect Across The Board
  • Partner Content

Paramount’s Beverley McGarvey On Diversity, Authenticity & Respect Across The Board

One of the busiest women in the industry, B&T pestered Beverley McGarvey, president of Network 10 and head of streaming at Paramount ANZ, just enough that she agreed to chat with us. After stints at TV3 in Ireland and Mediawork NZ, McGarvey made the move to Network Ten in 2006, starting out as the head […]

Partner Content

by B&T Magazine

B&T Magazine
Redefining Brand For The Mobile Age: Jay Morgan Launches POPULA
  • Marketing

Redefining Brand For The Mobile Age: Jay Morgan Launches POPULA

Multi-award-winning creative leader Jay Morgan has launched POPULA, a creative brand agency on a mission to redefine brand advertising for a mobile-first world. Working as a creative and innovations director at The Monkeys from 2017 – 2020, Morgan saw a gap emerging in creative content. “We were asked to create content for more and more […]

Ash Barty & Michael Hooper Among Sport Superstars Joining Stan Olympic Coverage
  • Media

Ash Barty & Michael Hooper Among Sport Superstars Joining Stan Olympic Coverage

With less than two months until the world’s eyes turn to Paris, B&T was delighted to be in attendance at the beautiful Bennelong Restaurant at the iconic Sydney Opera House as Stan Sport announced its comprehensive coverage plans for 2024’s showpiece event – the Olympic Games. Stan Sport will feature every event from Paris 2024 […]

Porsche Reviews Creative Agency
  • Advertising

Porsche Reviews Creative Agency

Nothing says "midlife crisis" like a Porsche, does it? Or for men who can't afford one - the ill-thought-out ponytail.