You see them everywhere! Billboards clutter almost every city and roadway. In any cityscape they are inescapable. And yet, ad agencies ignore billboards or outdoor advertising completely when making media plans for their clients! Ad agencies neither recommend nor arrange outdoor advertising. Online advertising is also not on ad agencies' hot list of media. Why?
The strange fact is, most outdoor advertising is neither recommended nor arranged by ad agencies
To marketers, whether they know it or not, this state of affairs poses a present and clear danger.
You’d think they would be hot favorites. Judging by their presence on the ground and in cyberspace, you’d think an ad agency worth its salt would never leave them out of a media plan.
Strangely, most outdoor advertising is neither recommended nor arranged by ad agencies. Neither is online advertising on the hot list of media that ad agencies are quick to recommend. Ever wondered why?
It couldn’t be because of an agency oversight or dull-wittedness.
It seems that ad agencies are consciously omitting them from media recommendations. What is in it for them to do so?
To get to the bottom of this one must understand how ad agencies earn their income. They get paid a commission, usually 15% on every ad they place on behalf of a client. Whether it’s in mainstream TV, Radio or Newspapers, each time the ad runs the agency pockets 15% as commission.
It adds up to quite a bit.
You guessed it. Outdoor and online advertising don’t pay agencies any media commission. Not a cent. As a result, ad agencies have little motivation to recommend these media.
Outdoor and online advertising don’t pay agencies any media commission. Not a cent. As a result, ad agencies have little motivation to recommend these media. In fact, most ad agencies don’t even provide on line advertising design or support. And the neglect by agencies of outdoor media is obvious from the lack of innovation or creativity displayed in it.
The sad thing is, this state of affairs make advertisers spend millions of rupees more than they should, because the ad agency wants to earn media commission!
It is real and alive and widespread. The practice cannot be ignored as a flash in the pan operation restricted to a few deviant agencies. Everyone is in on the game, and media organisations have no interest to stop it either!
To marketers, whether they know it or not, this state of affairs poses a present and clear danger.
Notwithstanding the fact that many advertisers directly contract for outdoor online advertising, the motive and actions of ad agencies leave much to be desired.
More relevantly, this penchant for omission make ad agencies suspect, and their advertising plans biased to the point that marketers may be compelled to call in independent experts to evaluate media plans. They might then have to obtain creative services from specialty creative hot shops, that do not charge media commission at all, opines an industry observer.
Ad agencies argue that until marketers are willing to pay for good creative and services provided by agencies free of charge, nothing is going to change.
Ad agencies argue that until marketers willingly to pay good prices for creative and services that agencies currently give free of charge, nothing will change. `Without agency commission, it would be really hard for an agency to continue to give the range of services one provides free to advertisers.
The effect of media commission
"Ethics is knowing the difference between what you have a right to do and what is right to do." - Potter Stewart
They include proactive creative design and concepts, strategic planning, writing, media coordination and account management – all of which are essentially paid for by media commission. An ad agency would have to be selfless or extremely foolish to recommend media that eat up the marketing budget without earning any income from it.
That industry is changing, and the players – marketers, the media and advertising agencies- are all working in their own self interest. In the long run businesses and agencies will have to adjust to a new reality and perhaps embrace the inevitable changes that are shaping this relationship between advertiser and ad agency before it’s too late for the agency.
Many industry experts believe that the solution to this problem is to force all media to pay agency commission. Others believe that the whole idea of agency commission is outdated and require to be replaced with something better. Such advertising industry associations as the Four As (Accredited Advertising Agencies Association) and IAA (International Advertising Association) have tried but agencies are notoriously individualistic and most attempts in the past at collective actions had come to nought. They offer little hope with regard to this issue either.
Industry sources believe that market forces may bring about a solution to this problem eventually.
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