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of new media agencies
Report worries over efforts to cut from the process
By Marty Beard
Alan Greenspan may have alerted the nation yesterday that the recession is all but over, but there's good cause to wonder whether his message was heard over the din of the bickering in new media advertising circles.
Blame it on these hard times, blame it on long simmering tensions, but there's a nasty fight going on in the new media marketplace, and it's a fundamental one over the role of the agency as the middleman between web publishers and advertisers, reports Jupiter Media Metrix.
There's a growing trend in which both advertisers and publishers are attempting to squeeze out the agencies, hoping to save money both on creative and placement costs.
And it's an unwholesome trend, in the opinion of Jupiter Media Metrix analyst Marisa Gluck.
While slicing out the middleman may make sense in the short term, Gluck warns of the long-term consequences.
"As the battle between agencies and media companies extends to creative budgets, media businesses will find themselves unable to compete over the long term," she says.
"Beware the wrath of the agencies—they will forgive for now, but they will not forget."
Gluck says that while pressures to bring creative in-house are not unique to new media, they are far more common.
"Not too many advertisers think they can do off-line media by themselves. Agencies have clearly articulated their value proposition there," Gluck says.
"But they haven’t done a very good job of translating that into interactive."
About a quarter of advertisers, or 27 percent, want to bring their ad agency’s services in-house, Jupiter Media Metrix finds.
Twenty-one percent of advertisers describe their relationships with their agencies as uncertain; 18 percent see them as transient and based upon the cost of services, and 34 percent say the relationships are getting better as services improve.
"Given that two-thirds of advertisers are pretty bearish on their agency relationships, what we’re finding is that agencies haven’t really done a good job of explaining the value of interactive services to their clients," Gluck says.
Creative, too, is at issue, Gluck says, because it seems to be the only segment of the interactive businesses where the agencies are earning money. Agencies are understandably concerned that publishers might take that away.
"The creative budget has always been sacrosanct for the agencies, especially now that creative seems to be the only place where they’re making any money–the only profitable portion of their interactive business. Media companies really need to step back and let the agency control that," Gluck says.
Ultimately, the report’s message is that advertisers and publishers need to keep agencies in the loop.
"They’re jeopardizing agency relationships when in the end agencies can really help them. Agencies can really be a catalyst for deals rather than the enemy," Gluck says.
Why? Both publishers and advertisers lack sufficient resources and understanding to manage their own campaigns. They will get bogged down, particularly once the economy comes back to life.
Accountability is also at issue. The report likens a publisher’s taking care of the reporting and analysis for the advertiser to the fox guarding the henhouse.
"While advertisers believe they can replicate the planning and buying functions of an agency—and perhaps even much of the reporting and analysis function as well—they will find it much more difficult to duplicate the creative competencies in which good agencies excel," the report says.
Publishers increasingly are looking to sell cross-channel deals to advertisers, the report notes, and that sort of expertise is best left to the agencies.
"What we’re seeing now is that what some publishers are doing is forcing agencies and clients into a vendor relationship rather than a partnership. That’s a problem," Gluck says.
February 28, 2002 © 2002 Media Life
-Marty Beard is a staff writer for Media Life.
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