I had a drink with a supermarket client recently. As usual the hustler in me could not help popping a question about whom he works with as agency. His answer startled me a little. “ We don't work with agencies, we tried and found no value in working with them."
My poor agency ego was obviously blunted. A look through the retail category and the list of top advertisers however explains this client's attitude. For starters supermarket clients have a core skill as the determinant of their business profitability, and that is the ability to buy at low prices. Media agencies have a miserable time dealing with them as they seek low prices over all else. This relates to cost of services and cost of media.
Media houses also deal with retail clients differently. Based on their history of bargaining and low prices they often give them lower rates than the average client. The media agency thus appears as a meddling broker in this relationship. Thankfully, the media environment has become more complex than the average client can handle with a calculator and cheque book alone.
Kenya has more than 200 media owners with audiences split across channels and publications. The agency that invests in research and insight generation will continue to provide superior market knowledge and insight so as to generate better messages and deliver ever more precise media strategies. Agencies have over time evolved from a broker to a consumer expert.
The purchase of media has slowly but surely become the lesser of the challenges a client will be faced with. Understanding the audience provides the ability to deliver services and messages that relate to them. Developing messages that resonate with them and are delivered in the right media saves more money than haggling the media house for the placement of what may be the wrong message.
Key agencies around the world have invested in processes that provide them with insight. This year more than two of the largest agencies in the world have relaunched their media and insight tools. These tools and processes provide clients with an edge in the the way they understand and address their audiences. Few clients have similarly refined thought processes and this creates the need for the agency partner.
Truth be said though, given our market structure the bottom five agencies are still smaller than the top five clients as media buyers and the clout that volume brings will possibly still evade agencies as long as this situation prevails.
Clients and their refinement of the procurement process have also become better buyers than they were. Procurement departments are clients where they are treated as strategic units often approach media, more intelligently than the agency.
This has to do with remuneration systems and long term thinking. Agencies earn a percentage of the cost while purchasing departments are rewarded for low price. A purchasing department also has more options than money to put on the table as they have more access to the internal resources of the company.
This way they are able to commit longer term than agencies. A hybrid of these two will eventually evolve and provide clients better value by collaborating the strengths of the individual systems.