Focus Ad agencies are deliberately omitting some media
You see them everywhere! Billboards clutter almost every city and roadway. In any cityscape they are inescapable. And yet, ad agencies ignore billboards or outdoor advertising completely when making media plans for their clients! Ad agencies neither recommend nor arrange outdoor advertising. Online advertising is also not on ad agencies' hot list of media. Why?
You'd think they would be hot favourites. Judging by their presence on the ground and in cyberspace, you'd think an ad agency worth its salt would never leave them out of a media plan. But they do, consistently. It couldn't be because of an oversight or dull-wittedness. It seems they are consciously left out. Is there a conspiracy here? To get to the bottom of this, one must understand how ad agencies earn their income. Their revenue comes from selling creative products - like designs, concepts and artworks- but the lion's share comes from media commissions. The media pay commission to encourage agencies to run their clients' ads on their media. Most mainstream media such as TV, Radio and national newspapers, pay the agency 15% of the value of any advertising it buys on behalf of a client. In any given year it adds up a bit. On the other hand outdoor and online advertising don't pay media commission. Not a cent. As a result, ad agencies have little motivation to recommend these media. In fact, most ad agencies don't even provide online advertising design or support. The practice isn't just a flash in the pan operation restricted to a few deviant agencies. It is real and alive and widespread.
To marketers, who depend on ad agencies for advice and guidance, and need communication campaigns to retain and grow market share, this state of affairs poses a far more serious danger- the loss of market share to competitors! More relevantly, such omissions and selfinterest make ad agencies suspect, and their advertising plans biased to the point that marketers may be compelled to call in independent experts to evaluate media plans. To remove this bias, they might then have to obtain creative services from specialty creative hot shops, that do not charge media commission at all, opines an industry ob- server. Ad agencies argue that until marketers willingly pay good prices for creative and for services agencies currently provide free of charge, nothing will change. Without agency commission, it would be really hard for an agency to continue to give the range of services it provides free to advertisers. Proactive creative design and concepts, strategic planning, writing, media coordination and account management - all of them are essentially paid for by media commission.
If this is to change, businesses and agencies will have to adjust to a new reality and perhaps embrace the inevitable changes that are shaping their relationship. Many industry experts believe that the solution to this problem is to force all media to pay agency commis- sion. Others feel that the whole idea of agency commission is outdated and require to be replaced with a better mechanism of agent remuneration. Such advertising industry associations as the Four As (Accredited Advertising Agencies Association) and IAA (International Advertising Association) have tried but agencies are notoriously individualistic and most attempts in the past at collective actions had come to nought.
In this matter too, it's hard to imagine ad agencies finding accord or acting in concert. Industry sources believe that market forces may bring about a solution to this issue, eventually.