Agency performance review 2010
14 December 2010
After 2009’s price cuts, hard graft and pitches, the past 12 months have been a time to tend to bruises and regroup a little. For many people M&M spoke to for this article, this has meant that 2010 has been a bit of a non-year and that 2011 is shaping up to be the one to watch.
Even though the relative quiet of 2010 and its lack of drama has given agencies the chance to relax, the pain of 2009 has left its legacy and some key trends have emerged from the dust of the pitch frenzy.
At the close of 2010, what has become clear is that agencies have had to reassess their remuneration models. The “race to zero” that has been perpetuated by a combination of zealous procurement departments and an over-eagerness to win new business on the part of agencies has led to a situation that is rock-bottom.
Crucially, agencies have been forced to increase their capabilities in a wide range of media, ramping up social media skills to inform paid and owned media and integrating the associated skills within planning teams.
One of the main areas of focus has been data and the potential that optimisation models of planning and buying can yield for agencies. By investing in proprietary technologies that enable agencies to act as arbitrageurs of media with precision targeting, they can differentiate themselves in the market and justifiably charge more for their services.
Demand Side Platforms (DSP), or buying platforms that use data to help automate and optimise media buying, have been a buzzword of the year, with holding group level emphasis from the likes of WPP investing in Zap and B3, Publicis cementing its Vivaki division, IPG investing in Cadreon, and Havas launching Adnetik.
While first-generation DSPs have been capable of real-time bidding for online display, the next generation of media management platforms willbe capable of buying, analysing and optimising campaigns regardless of platform or device.
DIGITAL COMES OF AGE
The “year of mobile” has been bandied around for such a long while that it elicits a groan from the industry every time it is now uttered. But 2010 truly seems to have achieved that status.
This is linked to the need for clients to give agencies more business oriented goals, as opposed to reach and frequency-rewarded results. In many cases, digital media now enables agencies to link their work to acquisitions, which puts them higher up the food chain. This has led to a rash of new performance-related pay models.
The world of online video has been a hot topic, with pockets of innovation around ad formats. Meanwhile, agencies have increased their forays into branded content with a move beyond the odd web series into strategic partnerships, where brands exchange content and exclusivity in return for profile on media owner platforms.
As media prices rise, it will be interesting to see how much money agencies need to give back to clients after their silly promises the previous year. This will obviously be a bigger problem for any market where there is a larger rebound, such as the UK, Spain and Greece. If deals were done at the market’s lowest point, the “dead cat bounce” of market recovery will prove painful for some agencies.
From a geographical perspective, it has been all eyes on Africa, where burgeoning ad spend growth is being driven by telecom companies, financial services and FMCGs. After LatAm, China and India, Africa is the next big market opportunity, with WPP, Publicis and Omnicom investing in the region.
Perhaps reflecting the streamlining of 2009, some agencies have also used 2010 to shorten their names – Universal McCann to UM and Mediaedge:cia to its more informal MEC moniker.
Recognising key trends is one thing but competition is another and the large networks are still fighting to maintain their standing. M&M asked independent experts to analyse agency performances over 2010.
Best at data/analysis –GroupM
Data has always been core to media planning and buying, but its increasing accessibility – thanks to the measurability of digital media – means that there is an even bigger need to understand and aggregate. Furthermore, the qualities required of buyers have moved from volume and clout to intelligence and optimisation.
GroupM has really focused on data-driven media buying by building a central technology resource called the Zeus Advertising Platform (ZAP) – which integrates targeting, optimisation, buying and analytics alongside its demand-side platform B3.
Both are housed within the Media Innovation Group (MIG), where the aim is to build technology and leverage data to give agencies and advertisers access to the audiences they are trying to reach, however niche. In September, GroupM announced its first DSP for mobile media, integrated into the B3 offering.
Data relationship managers bridge the gap between Mindshare, Mediacom, Maxus and MEC to evangelise and integrate the use of data-driven media practices into daily routines.
One auditor comments: “GroupM has been a pioneer when it comes to data driven marketing, but the constituent agencies could get better at harnessing the group resources available.”
Best Integration of digital –OMD
After years of claiming to be able to handle digital, 2010 has seen the large agency networks really take control of digital media. Brands have begun to shift their budgets away from specialists and take them in-house. OMD has more than 2,000 digital specialists and a further 500 search experts integrated into its account teams, and invested more than $1.6bn in digital media.
A solid deck of digitally-inclined clients such as Vodafone, Apple, Google, Sony and Intel are testament to the agency’s strengths as well as helping drive its capabilities. One consultant says: “Some agencies can be hindered by the pace at which their clients can adapt to the new media landscape.”
Two key areas of focus for OMD are search and mobile. OMD Search has grown throughout 2010, with staff increasing by 20%. Meanwhile, OMD Mobile has boosted its number of mobile specialists by 50%.
Chief executive Mainardo de Nardis is keen to ensure that “digital doesn’t remain digital on the side of things” and has highlighted full integration as a key priority. He doesn’t like the use of the word digital as he believes it implies that it is separate from the mainstream services of the agencies, when in fact it is the electricity that drives every marketing programme.
Collaborator of the year –Havas Media
Clients are increasingly demanding fluid collaboration between their agencies and media partners, and Havas has been at the forefront of driving that movement, perhaps out of necessity because of its smallness.
Without the scale of size that is all too often perceived to be an advantage, it has worked hard to embrace the digital age and remodel its offering with a policy of collaboration. MPG and Media Contacts have teamed up in the US to launch the Collaborative Alliance where, since late 2008, content creators, technologists, distributors and researchers have been meeting up to present their interactive televisual propositions in a quarterly forum.
Also in the US, MPG and Aegis Media have formed a strategic partnership with their out-of-home assets, linking MPG’s Chrysalis and Aegis’ Posterscope.
Havas Digital has teamed up with Yahoo to work with the Right Media Exchange to develop a proprietary media trading platform based on Yahoo’s technology. It has also partnered with Kenshoo to provide a search engine marketing platform. In the Indian market, Havas has joined forces with Percept to create a media buying joint venture, called PH Media.
Havas’ recent third quarter results have showed a strong performance, with a 12.6% increase in revenues. The Media Group’s new business has seen a 42% rise in income, from €1.1bn ($1.5m) in 2009 to €1.6bn ($2.1bn) in 2010.
UK managing director of media contacts Paul Frampton commented in an NMA interview that Havas is “naturally more collaborative than the likes of Aegis and GroupM”.
Best branded content/King of content – MediaCom
Moving beyond the tense frenemy connections we have seen in the past, the rise of meaningful relationships between brand and media owners has characterised 2010. In the quest to deliver greater engagement for their clients’ spend, they’ve had to.
These are still not easy to achieve but Mediacom has become a leading agent in creating these coveted branded content partnerships.
In line with the most significant change to the model to date, the agency has taken the popular ‘Britain’s Got Talent’ show format to China by teaming up with IPCN, Shanghai Media Group and format owners Freemantle and Syco. Sponsored by Mediacom client Procter & Gamble, it has become China’s number one hit of the season.
In the US, Mediacom has united US financial brand Discover with college American football game ‘The Orange Bowl’ in a five-year deal that encompasses naming rights and broadcast integration on ESPN throughout the year.
Mediacom has also brought together two of its clients – SEAT and Universal Music – to create a series of advertiser funded programmes featuring established and breaking artists and broadcasting it on the UK’s Channel 4.
One regional agency chief executive says that Mediacom: “has orchestrated an impressive list of content deals”.
Innovator of the year – Vivaki Nerve Centre
Formed in the summer of 2008, Publicis Groupe’s Vivaki is a unit designed to drive the holding group and its agencies into a digital future. Vivaki’s Nerve Centre is the think-tank and research and development hub where much of the innovation action for the unit happens.
Vivaki has a remit to build new platforms and products as well as strategic partnerships. It has built a trading desk to bid on emerging ad exchanges – The Audience on Demand network. It has also pioneered ad formats through a research initiative called The Pool. Launched in 2009 and delivering its first results this year, The Pool embraces an experimentation mentality, bringing together clients, media owners and tech companies to test different emerging models.
As a result of The Pool’s first investigation, it unveiled a new ASq video ad unit in September, which will roll out across YouTube, Hulu, AOL and Yahoo. The new ad unit allows consumers to choose which ads they are served before viewing a piece of video content. Vivaki claims that metrics such as “top of mind awareness” are lifted by more than 400% in some cases.
One auditor comments: “Although there have been some pockets of resistance to the wider Vivaki model, the Nerve Centre has become a unique central hive of innovation.”
Just because agencies have been recognised against specific trends does not mean that they are doing everything that they should be. In the course of research, M&M has met with a body of opinion that suggests the big agency networks don’t deserve any more back slapping. These developments are what is expected of them anyway. In many instances, smaller agencies, trying to do things in different ways, are snapping at their heels. The big picture is still one of the main agency networks struggling to connect all the dots. It’s not until one agency has its name against all these points that we’d have a representation of true success.