"Clients have become more discerning and realistic in their selection of agency partners", says Infectious Media's CEO and Co-founder, Martin Kelly, as he discusses management consultancies with AdAge.
Of all the developments to have emerged from the debate over media transparency, the one we should be least surprised about is that management consultancies have stepped into the breach. When advertisers seek different solutions to their core problems, the bigger consultancies are poised to flex their advisory muscles.
Determined to regain confidence in their media budgets, advertisers turn to management consultancies for advice. At a minimum, this gives media agencies a new type of partner to deal with. But it can also represent a competitive challenge. Over the last year particularly, we've seen Accenture and Deloitte shoring up this new revenue stream by buying creative and media related services, giving them a significant and growing foothold in the agency sector.
But let's hold off with the easy clichés about tanks on the lawn. It turns out, media agencies could actually learn a lot learn from the business models and operating styles of consultancies. Embracing these models will aid them as they evolve their operations and strive to recapture the trust lost by worries over online ad transparency.
Because evolve they must. The idea of being able to charge a percentage of media budget as commission is under threat. Advertisers are calling for more analytics and more tech resources, and these demands aren't compatible with the flat-percentage model.
Agencies now face the necessity of needing data analytics expertise, plus mastery of digital ad tech, that can be tailored to meet the needs of each client. At the same time, these assets need to be delivered with a far more collaborative and open relationship with clients than ever before. It's all a far cry from that relatively straightforward, old business of offering one service: planning and booking ads.
Aligned with business objectives
There's a reason consultancies have a hotline to the CEO or the finance director. They excel at aligning their entire operation to the client's ultimate business objectives (rather than the simpler comms objectives that most media agencies tilt towards). The successful media agencies of the next few decades are likely to be those that can adopt this orientation too, becoming increasingly flexible in how they offer (and charge for) their services.
This also means that the agency planning function is likely to rise in importance. As the mix of services that agencies provide to clients become more dynamic, they'll need to adjust constantly to changes in business and operating environments.
This kind of dynamism will prove very challenging to media agencies still stuck in a rigid structure, with fixed account teams and hierarchies built around traditional lines.
Opportunities for the agile
But there will be some opportunities, too, especially for agencies agile enough to spot them in time. The media transparency crisis has forced many clients to take a hard look at what they need - rather than just assuming they can buy in a standard "package" of media agency services. As a result, clients have become more discerning and realistic in their selection of agency partners.
While this may make life easier for agencies with long and favorable reputations, I'd argue it is also good news for progressive agencies that enjoy embracing new ways of doing business.
Management consultancies might look like they're in the ascendant in our business right now. But my prediction is that, in a few years' time, we'll see an increasing number of media agencies borrowing their colors, especially in terms of how they offer and charge for services.
