Media as commodity and rise of the procurement guys

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When I first read about an FMCG company asking media agencies to pay for a pitch (on a Twitter feed of a well known media personality in India), I couldn’t believe what I read. And then the news reports confirmed it: Reckitt Benckizer called for media agencies to pitch for their business by paying a pitch fee and committing to return 2.5% of the commission they (the media agencies) receive from media. There has been a hue & cry within the industry, especially since such a move comes from a respected global marketer. There are some who see it as a wake up call for the industry. Either way, it can’t be ignored since we are talking about one of the largest spenders on TV, with control of over Rs.200cr. Thomas Cook called for a similar pitch in the UK and demanded for: a “substantial signing-on fee in return for a three-year contract award” in addition to “a reduction in agency fees currently paid” and “a minimum 10% saving through consolidated media buying”. Wonder what’s left with media agencies?  This and the related subject of ‘free work’ was hotly debated over at AdAge.

Even with such demanding (debasing, some would say) situations, make no mistake , there will be takers for the business. Here we were, hoping against hope that agencies will be united in their stand of asking for pitch fee. And then clients return the favour. A pitch fee was mooted some time back and was promptly discarded as some agencies hoped to climb by pulling others down. As for clients, who wouldn’t accept ideas for free? It takes a special kind of client to acknowledge that asking work for free is not ethical and that the relationship with agencies needs to be on even keel, mutually rewarding. The onus, therefore is on agencies to make someone see value in their ideas. Ironically, just a while ago, there was debate within agencies as to who has invested more in ‘knowledge’: creative agencies or media specialists. And many argued that it was the latter. I too believe so, as media planners & buyers are seen as the ones who are closer to the consumer, making recommendations based on solid research & number crunching. They are also known for their creative thinking on brands – as witnessed by the quality of work that won awards in the Media category – be it at the Goafest or Cannes. So if they are seen as specialists who use research well and have a creative bent of mind, how can it argued that what they deliver – is mere GRPs is therefore commodity?

In 2009, the editor of AdAge asked ‘Has Advertising Procurement Gone Too Far?’ and wondered how a bunch of guys with no advertising background treat advertising investment like buying office supplies. They are the guys who ask why an agency needs a senior talent and can’t make do with 3 employees at half the cost. The irony is that around the same time, in some other conference room at the client office, the CEO would be practicing a speech where he would urge agencies to invest in new talent, new technology to keep pace with the changing needs of the brand and add value to the client’s business.

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