Tackling the Challenges of Media Agency Renumeration

April 2014

Digital media accounts for nearly a third of advertising investment today and its share continues to rise. Meanwhile, the cost of digital media planning and buying tends to be more expensive per media pound than other major media channels. In order for brands to achieve the most effective media mix, these factors demand closer inspection. We gathered perspectives from a cross section of commentators with the aim of exploring the dynamics of media agency remuneration in our digital age.

Valuing Media is a collection of essays offering opinions and perspectives on challenges around appropriate payment models for media agencies...

Google's Mark Howe believes that If the relative contribution to the media agency bottom line varies significantly by media channel, it poses a threat to overall media neutrality and advertiser effectiveness. He advocates that agencies be paid in proportion to the value they create for clients.

As the lines across multiple media become increasingly blurred, Nick George of TMT Strategy PwC says that now is the time for digital marketing to move to being marketing in a digital age.

On behalf of the IPA Media Futures Group, MEC's Jason Dormieux says that with cost control of paramount importance to agencies and clients alike, it's vital to continue to work together to demonstrate the accurate and efficient use of media as a value creator.

According to Paul Zwillenberg, Partner and Managing Director of BCG, successful agencies will identify value-creating activities that ultimately lead to more effective campaigns, shifting from being service providers to strategic advisers and refocusing clients' mindset from the volume of impressions towards quality.

Graham Cooke, Founder and CEO of Qubit Group, predicts access to more granular web data combined with better data processing and visualisation techniques is paving the way for a renaissance in business intelligence, enabling agencies to better help web businesses understand customer tastes, buying habits and lifecycles.

Mandy Merron from Kingston Smith W1 explains that the value a good creative agency brings is identifying what the client stands for, helping the brand behave consistently with that business purpose and enabling the client to engage with customers in the most cost-effective way to drive revenue.

Havas Media CEO Paul Frampton argues that buying some "media" with a focus on price is not the route to delivering sustainable value; genuine, transparent value creation requires emphasis on business return, not media metrics.

For Jellyfish MD Matt Owen, it is vital that remuneration be based on business principles that encourage long-term trust and collaboration, including fairness, transparency and mutual respect.

Emmanuel Arendarczyk of Netbooster argues that a competent agency will always choose to share its destiny with that of a client, so incentive and performance-based renumeration models are two approaches that allow clients to feel confident about their investments.

Avinash Kaushik, Digital Marketing Evangelist at Google, says, "We should take the amazing set of skills that exist in our agencies, make them full partners in our success, and do so using metrics. Because we are going to ask for more, we should be willing to pay more for it."

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