A new WFA report identifies the latest trends in global media agency models and remuneration.
Based on input from 51 global media experts representing companies with a global media spend in excess of $40bn, the report Media Agency Models & Remuneration identifies a clear appetite for reviewing what service is ‘rented’ versus ‘bought’. Here are some of the findings.
- Two media agency models represent the prevailing approach to agency management across the membership, with the single network media agency model being most widely adopted (42%) versus a mixed network of agencies from different groups (36%).
- There’s some evidence to suggest that clients will begin to switch allegiance to the mixed network model in the near-future. Net predicted growth of the mixed network model is double that of the single agency model (45% vs 22%).
- But the real appetite for change is concentrated around in-house or hybrid models, for which 68% say they are likely to do more of over the next 3 to5 years. This is supported by the fact that half of the respondents agree that ‘Biddable media buying is a commodity that can be done as well as an agency’.
- Despite the confidence, in-housing is a divisive issue, considered a ‘false economy’ by almost two-fifths of respondents. It’s increasingly recognized that even the most established in-house teams depend on agency support to some extent.
There has probably never been as much flux as now, in terms of what we need from agencies and how we work with them, and this is reflected in this research. But while in-housing is on the rise, considering the highly complex global media ecosystem we find ourselves in, we still need agencies. And clients have a role to play in the maintenance of a healthy agency ecosystem. We can’t ignore the fact that rock bottom fees prompt agencies to seek out alternative revenue streams, which in turn fuels the transparency fall-out we’ve witnessed over the past few years. But the impasse can be broken.
And in this research, we find that clients are increasingly looking at new ways to value and pay for agency services, with a focus on strategy and planning. Meanwhile, it’s encouraging that network agency are increasingly prepared to offer progressive remuneration models. As we hear regularly from clients in our Forums, “we cannot cut our way to growth”. True partnership, underpinned by a fee model which remunerates appropriately and incentivizes the right outcomes, has got to be the right way forward.
We hope that this research can help arm members with some benchmarks and insights to pursue such a partnership.