Foxtel’s sales and marketing director Ed Smith has hit out at the issue of agency bias.
Transparency around rates, and relationships between clients and agencies, has always been an industry issue, but in recent months it has become a heightened priority for many on both sides of the fence. Smith spoke out about the issue at the Media Summit, questioning what an agency’s role is.
“Are agencies technology advertising solutions providers or independent advisors to their clients on how to invest in media? I find that a very big issue for clients and agencies to solve. When they are mixed in one shop you are always counting your fingers every time after a meeting,”
Smith led the shake-up at MediaCom in December after Foxtel discovered inaccuracies in post-campaign reporting. He switched his media account into fellow GroupM agency Mindshare earlier this year.
“Where it gets tough, though, is when [the agency says]: ‘We want to reduce your TV investment by $10m next year and invest it digitally because we can provide the cost per acquisition etc’ and you as a client know that [the agency] earns 10% from the TV spend, and 30% or 50% on average from the digital. I’m like: “Hmm. OK. How do I know that is transparent or impartial?’ It’s really tough,” he said.
Chris Nolan, StarCom MediaVest CEO, speaking on the same panel, suggested that the agency revenue model in question wasn’t providing a “solution-neutral environment”, adding that perhaps Smith needed to find a new agency for Foxtel. The exchange drew laughs from the audience, but the serious issue beneath the humour remains.
Commission structures have also come under fire as a factor in unbiased media choices. Speaking earlier this year when he outlined the new direction and redefinition of UM as an agency, CEO Mat Baxter pressed the point that when agencies earn a greater profit from one channel than another a natural bias occurs. Removing that, he said, means agencies are incentivised to find the right solution for agencies and not just use the channel that pays best.
Stats from the AdNews and Roy Morgan Media Benchmark Study back up the concerns. Less than a quarter (22%) of media sales professionals think media agencies are open and transparent in their approach to fees and charges, including media commissions, according to the report.
The report, published this week, also found that just one in 10 (11%) of those surveyed in media companies believe agencies make unbiased choices about which media suits the client brief. While there is an inherent bias in the view media companies take in relation to other media channels’ share of the advertising pie, the figures do throw up some questions about the perception of agencies in the eyes of media companies.
A version of this story originally appeared in the latest issue of AdNews Magazine (29 May). Want more? Subscribe in Print here, or get it right now on your iPad here.
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