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They respond to efforts to cut them out of the loop
By Marty Beard
When Jupiter Media Metrix released a report last week on the growing tension in the new media marketplace over efforts by web publishers and advertisers to squeeze out ad agencies, the reaction from the agency side was swift and vocal.
A story in Media Life on the report brought a string of responses from agency executives defending the use of agencies and the value they bring to both advertisers and web publishers.
The report concludes that a major force behind the trend is the depressed ad economy, which is driving publishers and advertisers to save costs by striking deals directly, handling placement and creative on their own.
Jupiter Media Metrix found that 27 percent of the advertisers it surveyed planned to bring ad services in-house.
The report argues that the trend is both regrettable and short-sighted and that over time it would work against the interests of both buyers and sellers, to the detriment of the new media marketplace.
Agency people, reacting to the report, could not agree more.
"I’m biased, but I think it would be a lot easier to work with an agency unless you’ve got incredibly deep pockets and can afford to staff what would amount to an in-house agency," says Sean Carton, managing partner at Baltimore-based Carton Donofrio Partners.
By skipping past agencies, Carton and others argue, advertisers miss out on the expertise, cross-media opportunities, future deals and objectivity agencies bring to the process.
Moreover, they contend, for advertisers to fire their agencies serves only to further the misconception that the internet differs fundamentally from traditional media.
"It’s not a matter of whether or not we can ‘do new media,’ it’s that new media is a medium, and we plan and buy media," says Jerry Courtney, interactive media specialist with Austin, Texas agency GSD&M.
There are two reasons for the agencies’ shutout, according to the report. First, there’s a perception that advertisers can save money by eliminating the middleman. Second, the agencies haven’t adequately explained the value of their interactive services to clients.
This raises a fundamental question: What, exactly, is so valuable about the agencies?
According to I-traffic vice president of media planning and buying Eric Valk-Peterson, the benefits are objectivity, a broader view across all media options, stronger negotiation and expertise from the planning and buying side as opposed to the selling side, as well as better creative talent.
First, the issue of objectivity: If publishers track ad performance, it’s not necessarily in their interest to report everything accurately, a situation the Jupiter Media Metrix report says is akin to the fox guarding the henhouse.
"The agency hopefully can bring some sense of objectivity," says Carton. "A publisher’s going to be looking out for itself."
David Smith, president of interactive agency Mediasmith, agrees.
"The biggest leverage area is in the tracking that agency would do," he says.
For example, Smith says, one of its clients once traded banner space with another site, only to find that its supposed partner wasn’t running the banners until it had lots of inventory open. Then it ran all the banners at once.
Agencies also can offer better creative than a publisher or advertiser can, they say.
"It takes experts to stay on top of creative changes, and it's critical in this industry to have tight coordination between media and creative, given the unique nature of many placements and programs," says Valk-Peterson.
Carton agrees.
"All the good creative people don’t end up at publishers, they end up at agencies. Otherwise you end up with crummy-looking campaigns. The publisher might not know or care and end up with something that doesn’t mesh well with the overall brand."
Agencies argue that publishers that don’t use them may not be able to sustain relationships with advertisers or land good deals.
"If they go around an agency, it could be that that site gets shut out of other pieces of businesses that they could otherwise have," says Smith.
"So not following the normal distribution channels in order to maybe make one buy a little bit more advantageous might be a bit more shortsighted for a site."
Also, as Carton says, an agency can aggregate clients and bring them to a publisher. A publisher would have a harder time finding them on its own.
"If nothing else, the agency reduces acquisition costs of new customers from the publisher and moves that cost to the agency," says Carton.
Agencies also assert that their optimization skills are superior.
"An agency tracking department will optimize by watching the server logs every day, and maybe pulling a piece of creative down from a site because it’s not performing, or taking creative that’s doing really well and adding it to the heaviest rotation," Smith says.
Finally, as the Jupiter Media Metrix report notes, cross-media promotions are difficult for an online company to carry off without help.
"If an agency is not just a new media agency but also a traditional agency, there may be cross-media promotional stuff that you just might not be able to work on your own," says Carton.
GSD&M’s Courtney agrees, noting that his agency has specialists in every medium.
"Our planners are called on to leverage their various expertise in developing media plans that deliver our clients’ overall objectives," he says.
March 5, 2002 © 2002 Media Life
-Marty Beard is a staff writer for Media Life.
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