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Fear and loathing in adland

20 Jul 2016  |  Bob Wootton 
Fear and loathing in adland

Antipathy towards holding companies and their group trading operations is growing, writes Bob Wootton

The US Association of National Advertisers' report into media rebates weighed its words carefully - and with good reason. But it nevertheless found much wrong and has helped to surface and step up an overdue conversation that rightly now won't go away.

Industry opinion now seems to be polarising into two broad camps - the holding companies and their group trading operations, and the rest of the world.

Although necessarily muted, the antipathy towards the former is widespread.

Agency planners don't want their finely-honed comms plans reconfigured to meet bulk deals with media owners. This, and the rewards now offered by leading media owners help explain the steady churn of planning talent at network agencies.

Even the most powerful media owners have come to realise they shouldn't have bolted for the convenience of mega holding company deals which then commoditised their inventory and intermediated them from their real clients, the advertisers. Some tech companies later took similar paths and now have similar concerns.

And for competitors it's simply sour grapes and "who ate my lunch?"

The networks have been undeniably successful, appealing to the relentless advertiser pursuit of 'savings' typically leveraged by procurement 'professionals' who sometimes mistake price for value.

There's no underestimating the fear and loathing out there.

For their part, the holding company operations are usually run by the toughest negotiators who have risen through the ranks by being thick-skinned and hard-nosed. They've long considered advertising folk flaccid, indulgent and effete, which is why they spend so much time together with their media owner counterparts (and invariably hosts) on golf courses and ski slopes.

Make no mistake, these guys are bloody good at what they do and many fear their retribution. The question is whether they're doing the right thing and an increasing number are finding voice to their answer, which is "no".

Meanwhile, a parallel and related issue is also attracting attention.

WPP's GroupM is suing ebiquity's Firm Decisions in London's High Court for allegedly not returning or deleting sensitive material that several of its agencies in several countries sent to the auditor in error.

An agency group, which is part of a holding group valued at £19bn is suing an auditor. The latter is part of a group valued at £80m whose US operation has just been instrumental in a seminal investigation on behalf of US advertisers into US media agency and holding group practices.

There's some mischievous joshing in the defence's response that WPP is 'a' - not 'the' - world leading marketing communications group, but it's beyond any reasonable doubt that WPP is a major force.

Sources have been quick to deny any connection between this lawsuit and the fact that Firm Decisions' parent ebiquity was involved in the ANA investigation. But the timing is coincidental and as my fellow Mediatel columnist Dominic Mills has pointed out, ebiquity/Firm Decisions and WPP/GroupM have some form.

Conspiracy theorists might almost consider this an exotic tale of entrapment and there's a sense of David and Goliath about it too.

There are of course two sides to every story and this is surely no exception. Relations have long been fraught. Agencies allege that some performance auditors (guess who) find fault in order to precipitate remunerative pitch briefs. However, big media buyers' market shares now give them comparable visibility into market pricing.

Many in the market quip that it's a long time since anyone saw a bad audit. The preparation needed for a comprehensive performance audit today requires extensive cooperation between agency auditee and auditor which some suggest 'sanitises' the outputs. The way media is traded, particularly the pricing guarantees now routinely sought and given at pitch, also means a bad audit can sometimes be a criticism of a client almost as much as an agency.

This High Court Claim recalls two old adages - "business is business" and "attack is the best form of defence" - and may not reflect well on WPP/GroupM in the eyes of people who engage auditors - the advertiser clients. What will/do they make of it?

Then again, WPP is known for being litigious as senior executives that have left its orbit and been subject to lengthy garden quarantine might attest. The "Grey Three" may be the latest to be hampered thus.

It would be a pity if the lawsuit was - as is likely - settled out of court. Not only would it deny us the juicy bits, but much more important for the state of the business, it would set a worrying precedent for anybody with the temerity to gainsay a large group's virility.

(If you've read this far you might feel I have some kind of downer on WPP. Sorry to disappoint, but this is absolutely not the case. It's simply that they are now such a dominant feature of this market that most roads lead to or past them.)

Flatpacked media?

Ikea recently awarded its $444m global media account to two holding groups - WPP and Dentsu Aegis.

Billed as 'groundbreaking', this purportedly gives each of its markets a choice of media agencies - WPP's MediaCom, Mindshare, MEC Maxus, and Dentsu Aegis' Carat and Vizeum in the UK, for example.

But what does it actually mean? Presumably commercial terms have been hammered out centrally? In which case, how much leverage does this afford Ikea's people in-market?

Does Ikea actually have freedom to choose any constituent agency? Will those agencies have any choice, for example if - as often happens - they are already otherwise overstretched? And will the holding groups seek to steer the business into whichever operating company suits them best?

Groundbreaking? Possibly, but questions, questions...A whole industry has mushroomed up to help punters assemble Ikea flatpacks - perhaps a promising augury for the consultants who advised on the pitch?!

Brexit

Humans being social animals, people like to be liked. Especially in an ultra-social business like advertising.

When it comes to political beliefs, the received wisdom is that voting Labour says you care about others; voting Tory, that you care about yourself. Perhaps that's why most advertising people (say they) vote Labour.

So it has been with Brexit. Remain was about future generations, tolerance and inclusivity. To vote Leave was to be racist, intolerant, isolationist.

Ask yourself, how many people have you met who admit to voting Leave, whilst everybody who voted Remain is at pains to tell you they did?

You'd think it would be easy to spot the winner and everybody in the bubble thought they had. But they got it wrong because they weren't listening. Just like at the last General Election.

Regular readers might recall my declared wish for a very close vote to impel our leaders to do their jobs and renegotiate a better deal for the UK in or out of the EU.

Many will disagree, but I feel I got the better half of what I wished for - a close enough margin, but to the wrong side of the line.

I don't recall any specific communications for or against during the campaign, just an ocean of disinformation. But I was really impressed by these ads for Leave which Campaign has just drawn my attention to. Adfolk being adfolk, I doubt they'll grant the director any awards, but they sure ought to offer him a decent job.


Bob Wootton is principal of Deconstruction.


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