Media Buying Briefing: A tale of two reports (on media agencies)

Forrester’s Wave

First, the Forrester Wave report, whose fall 2024 edition came out last week — and it held some surprises, as a few independents (PMG, Tinuiti, Horizon Media, Wpromote and Dept) were considered for the first time and shown in some cases to be giving the big holding companies a run for their money, thanks to agility, investment in tech stacks and talent retention. Even Florian Adamski, CEO of Omnicom Media Group, which received the highest score of all agencies cited in the report, noted their inclusion as a sign of “respect,” adding “when the whole world talks about holding companies all the time, it’s being neglected that there is a whole universe of very strong, independent specialists we compete with. If I’m a client, I want to explore the entirety of the offering out there.”

PMG and Tinuiti held their own as “strong performers,” a secondary ranking in the report that also included GroupM, IPG Mediabrands and fellow independent Horizon Media. That status landed them ahead of “contenders,” the tertiary level of agencies assessed, which included holdcos Stagwell and Havas Media Network and indies Wpromote and Dept. PMG also was crowned “customer favorite,” a result of survey respondents on the client side crediting the agency with “strength in leveraging analytics for incrementality, forecasting performance, responsiveness, and mastering media complexity,” according to the report. 

“Tinuiti and PMG’s strength in this evaluation comes from their growing scale combined with the independent nimbleness and skill that they have been known for,” said Jay Pattisall, vp and senior agency analyst at Forrester, and the report’s principal author. “They are working for, you know, really sophisticated brands and are offering them very smart uses of data and technology. Their technology investments and their tech stacks are impressive.”

PMG’s CEO and co-founder George Popstefanov is only too happy to take it to the holding companies, which he believes are very beatable for new business, on the strength of talent development, tech stack building and putting clients first. “It’s been a fundamental thesis for our business: if you really take care of your people, and make it a global talent destination — we’ve had less than 10% attrition rate on average since our founding, which is quite rare in our industry — then they take care of your customers, and drive tremendous results for your customers,” said Popstefanov. “In the court of public opinion, I think being considered to be part of the Wave was a big honor.”

The three holdcos that delivered the highest scores in the Wave report as “leaders” were, unsurprisingly, Omnicom (highest total score) and Publicis, since their recent earnings reports have put them ahead of the competition. The Forrester Wave report cited their ability to integrate data and intelligence into well-rounded media offerings, as well as their ability to deliver savings from principal media. Surprisingly, Dentsu also just landed at “leader” level, and was noted for its strategic strengths. (Those strengths are yet to to be reflected in the Japanese holding company’s meager Q3 earnings, which are detailed below in Takeoff & Landing.)

Pattisall noted that Dentsu talked about “the necessity of [being] 100% addressable, 100% accountable in the algorithmic era … It’s a true understanding of how consumer behavior is changing, and how the how the dynamics of the marketplace are changing. They just really understood that and articulated that in a in a way that was very forward thinking.”

Omnicom Media Group’s Adamski was obviously happy with Omnicom’s position in the Wave report, but cited the fact that client feedback gave the media agency network high marks for trust and transparency was a bonus. 

“That package of modern, cutting-edge capabilities and deeply trusted relationships in an industry that constantly is swirling about how trust has eroded between clients and agencies just makes me incredibly proud,” said Adamski.

But neither Adamski nor the other agency execs reached for this story — nor Pattisall, even — are naive enough to think everything’s perfect in their relationships with clients. And that’s where MediaSense’s joint report with WFA on remuneration comes into play. 

In sum, the “Future of Media Remuneration” report highlighted the disconnect between marketers’ desire for greater accountability and major gaps in measurement and transparency, which are slowing their ability to find new, more outcomes-based forms of remuneration. More than four out of five respondents (84%) cited “lack of data and measurement between the advertiser and agency to measure outcomes” as a major barrier, while, 87% believe agencies are resistant to adopt models that require greater transparency in how they make money. 

One holding company executive who declined to speak for attribution, said reports like this are valuable for agencies to understand marketers’ points of view, but he said when clients and agencies get down to the nitty gritty of banging out contracts, the goals don’t match the demands. 

“Foundationally, [clients] can really only report back financially internally, — ‘I saved this versus how I operated last year’ — it has to be as apples to apples as possible,” said the exec. “And when you start to shift the dynamic of how the agencies remunerated to include more of an outcome-based model, it starts to become less comparable. So you need to sort of step change that.”

The exec said with some clients he’ll incorporate aspects of outcomes-based comp into performance remuneration agreement, meaning a small portion of the fee might be based on our ability to deliver performance. “But at the end of the day, the input of that fee is still based on the people that they are agreeing to hire as part of the staff. So it’s challenging to make a real, material shift until we can get beyond that legacy.”

Adamski noted the risk associated with outcomes-based remuneration, and taking that risk is what can reposition agencies into a better light with clients. “It is an important strategic pivot from where we are now, where still there are a lot of clients that look at media agencies as partners that deliver a commodity — and if that is all, why would I not try to drive down the cost of that?” he said. “That is actually the most important message from this report. I believe there is a world out there where clients and agencies agree that what services agencies deliver have a distinct possibility of being a strategic growth driver, as opposed to doing something where an entire glut of competitors ultimately delivers the same thing over and over.” 

The silver lining in MediaSense/WFA’s report is that clients acknowledge agency costs are only going one direction: up. Which is music to Popstefanov’s ears. He would like to see the agency world approach winning clients and delivering results as a sport. 

“If you have the best team, the best culture, you’re going to win the championship, right?” he said. If you don’t, there will be no debates. When an agency outperforms, you have to compensate them. If they’re going to participate in the downside, then you got to allow them to participate in the upside.”

Color by numbers

Generative AI may be all the rage across the media agency world, but just how prevalent is AI use among U.S. consumers? A new survey by Morning Consult commissioned by CCIA finds that close to half of consumers (45%) have used AI services. Those numbers go up the younger the demographic: 65% of consumers 13-17 years old are using AI. And yet, 30% of consumers aged 65-70 say they have used AI services, and 7% use them on at least a weekly basis. More stats from the study: 

• 44% of consumers are more likely to say that AI has more positive implications than negative ones (27%), while 29% don’t know;
• Over half (56%) of consumers expect to use more AI services in five years;
• Over a third (36%) of consumers think the benefits of AI outweigh the risks, while 32% feel the opposite, and 32% don’t know.

Takeoff & landing

• Dentsu’s Q3 earnings showed the holding company struggling to get back to organic growth, showing 0.3% organic revenue growth across the holding company — with Japan (+2.8%) and EMEA (+6.8%) registering notable growth but the Americas (-3.1%) and the rest of APAC (-11.6%) still dragging. Full year organic growth guidance remains at 1%.  
• On the positive side, Dentsu’s iProspect won U.S. brand media AOR duties for Principal Financial Group, essentially consolidating creative, media, and customer experience across the holding company for the client. 
• IPG’s Kinesso is launching an “Experimentation Lab,” which it describes as a centralized platform for marketers to design, execute, and analyze experiments across all channels, including media, owned assets, apps, and web experiences. The Lab uses AI to streamline and scale the experiments (and insights gleaned) across all of IPG. 
• Confectionary and food giant Mars put its global media, ecommerce, social and influencer marketing up for review, primarily affecting incumbent media agency GroupM, which handles the bulk of that work now and was invited to participate. 

Direct quote

“The DSPs have too much power because they’ve been cookie monsters and they never needed to talk to a buyer or talk to a publisher before. Anything that sort of weakens the grasp of a DSP in my opinion is generally beneficial for a publisher in reclaiming their power and ability to generate sales on their own.”

— Scott Messer, founder of Messer Media, talking about the power of AI in curation. For more about that topic, check out Marty Swant’s AI Briefing this week.

Speed reading

• Antoinette Siu looked into how influencer spending will make its way back into the marketplace after going relatively quiet in the run-up to the presidential election. 
• Ronan Shields and Seb Joseph dug into the expectations around Google’s soon-to-be-announced cookie opt-in model. 
• Krystal Scanlon covered TikTok’s latest push to attract more small and medium sized businesses to advertise on the platform, with the launch of its Symphony Creative Studio. 
• I wrote about media consultancy MediaSense expanding its global footprint and areas of expertise with the acquisition of R3.