It is estimated that over $10 bn worth of ad dollars are already under review.
It has been 12 months since the war-cry from Marc Pritchard on having a cleaner supply-side platform. The industry as a whole has been taking steps in the right direction and yet there is a long way to go. YouTube has been in the crosshairs more than once due to Brand Safety issues; Facebook refunded advertisers for measurement errors while Zuckerberg has decided to focus on Facebook in 2018; ad fraud has cost advertisers $16.5 bn dollars.
Among all of these, there is another change that is sweeping the advertising fraternity which nobody is talking about. As part of bringing in efficiency and accountability from agency partners, large brands are reviewing their contracts. Procter & Gamble has already set 2018 as the deadline to reduce the agency contracts by 50 per cent. Shell, HSBC, ASDA and Microsoft have already called for media agency reviews. This is estimated at $10 bn by ID Comms, a marketing consultant.
And this is only January. If this continues, we could very well see upward of $50 bn changing hands this year and that, in my opinion, is on the lower side. What is interesting is that the reviews will eventually push the large agency groups to take the likes of Accenture and Deloitte head on in the marketing space, which they have been holding off on.
Such a massive scale of review happened three years ago, in 2015, when approximately $30 bn dollars was put under the hammer on a global scale (including US and Europe). Back then, Coca-Cola, DHL, General Mills, Honda, L'Oreal, Mondelēz, P&G, Coty, GSK, Reckitt Benckiser, and Unilever had reviewed there agencies. Some also called this a "race to the bottom" on account of short-term gain that these businesses wanted in the form of cheap media. Having burnt their fingers chasing cheap inventory, businesses would be changing their approach in all likelihood this year.
Transparency and quality of media has finally reached the top of the consideration set for businesses. This gives a much needed impetus to the fight against ad fraud as well as the re-evaluation of the relationship between agencies and businesses. A more accountable and transparent team, on the agency side, would mean a respite from commoditisation of media, which has been in the making for a long time. However, it remains to be seen to what extent businesses are willing to pay. The fraternity, as a whole, would be hoping that they no longer see commissions in the range of 0.5 per cent and, in some cases, in the negatives which has resulted in this mess in the first place.
Another key possibility that I foresee, in some places at least, is the need for automation of planning, buying and reporting. I mentioned this in an earlier article and this review will only push that possibility. While this is good for businesses as it would bring in objectivity to media plans, agencies can also spin this positively and start focussing on business strategy. This will put them in league with the big daddies of consulting but would also mean that agencies will have to re-evaluate the current team, re-skill or up-skill the talent and, in all likelihood, accept a new way of working which hitherto, they have not been exposed to.
In an effort to bring in more efficiency as well as agility to the spends, e-commerce players have for a long time deployed in-house teams for digital and have been using the agency partners for deals and partnerships that they can't get themselves. Globally, when over 50 per cent of the dollars are put on digital and, more importantly, majority being on self-serve platforms like Google, Facebook and programmatic, businesses may in fact go with in-house teams in 2018. This means that a chunk of the media under the hammer may not even change hands leading to a dip in ad-agency spends itself. If that were to happen, agencies will be forced to look at the top of the funnel of strategy consulting to run business, again competing with the big four.
What is more interesting though would be to wait and see if the big four of consulting decide to jump into the ring. That would change the scenario drastically. While they have been adding creative and digital business over the past few years, media is something that they have deliberately stayed away from, so far. However, with 50 per cent of the global ad spends being on digital, it wouldn't be a surprise to see them also in contention for their pound of flesh.
Unlike the Mediapalooza of 2015, where there were clear winners and losers, I only see businesses being on the winning side.
(The author is the CEO of What Clicks, first digital media audit firm in India.)