Mktg - Media Companies have capitalised better on changing ad landscape

Steve King certainly knows how to have the maximum fun with his pants on — or, for that matter, in a skiing suit, in golf wear, or in cricketing gear.
The worldwide CEO of media services heavyweight ZenithOptimedia, who claims “I’m only 28 years now” , lives life ‘king size’ . By the time you read this, King will be on a week’s vacation — sailing in a Regatta. He chooses to downplay his interests, though. So when he’s not competitively sailing “badly” , playing golf “badly” , or skiing “quite badly” , he unwinds with music for company. His best party number of all time: Sexual Healing by American soul singer Marvin Gaye.
And work? King, who started his career in media sales before crossing over to the agency side in 1982, is supposed to have not-very-famously said at the Venice Festival of Media, ‘marketing is no longer the chassis of the car. It is now the sunroof’. “It’s far too intelligent for me to say that,” says King in yet another attempt at self-effacing humour. “If I said it,” he continues, “I meant that the role of marketing in terms of understanding consumers is changing. The different silos of media like radio, outdoor and print will be replaced with a single seamless marketing continuum.”
However, you cannot have just one, single, creative message. “The media execution of an idea is being replaced by a marketing solution that’s executed across different touchpoints. The need is for horizontal and vertical campaigns ,” he says.
And that means the nature of the media services business is changing from being scale-obsessed to service-oriented. With consumers evolving, media itself is becoming the discriminator and not just a vehicle for the creative message. “That predicts that the business model could change as clients are looking for different ways of buying solutions,” King says, adding that media agencies as a segment have been growing. For example, in the last five years, the top 10 global media agencies increased headcount from 35,000 to 50,000 people. That said, most of the media agencies have also added a number of services to their portfolio, and even have proprietary research tools.
It naturally follows that with media agencies growing the way they are — in terms of size and in terms of the kind of confidence they’ve come to enjoy from the client — the media agency will soon take up the role of the lead agency, pushing creative agencies into the secondary function. That, at least, is the belief that keeps many media agency professionals going. King, however, is non-committal on the subject . “The times we live in are very fluid and liquid. It’s not entirely clear what will happen,” he offers. For example, in the past, the creative agency — or the full service agency, if you may — would come up with a solution (in most cases, a 30-second television spot).At Optimal Level
The media agency would then execute against that. “That model is breaking down in varying degrees . Media agencies have been able to ride on that and have been enjoying a greater degree of success than the full service agencies,” says King. He adds that media agencies will not become one ubiquitous force as every client has, and will have, different needs. “There is a customisation of solutions happening for each client,” says King.
But even as media agencies invest resources and offer a constantly widening array of services, remuneration is still a trickle. “Traditionally, media agencies have been paid on a volume basis,” King explains. “We have changed our scope of offerings, but there tends to be a lag in appreciation from the client’s end and in our ability to persuade them to pay more. Clients need to start seeing the results of the services we are offering and how it’s different from the high-volume , execution-led , transactional services that we traditionally offered.”
And the good news is that the winds of change have started blowing. “Internationally, 50%- 60% of our business is not commission based, but a combination of fees, incentive-based compensation and comparing our performance to that of the client’s — based on sales, awareness of brands and other parameters. Our objectives are aligned with the client’s objectives. The business is moving in that area,” he says.
At another level, even the definition of media agencies may be changing, with some of them even providing ‘creative’ services. So in a sense, at one level or the other, the wheel is coming full circle — almost back to the unbundled era of the full service agency. Or is it? “It’s still a very small percentage ,” King says, and adds, “We have also done that in some markets to provide clients a fully integrated solution.” Yet he treads with caution , saying: “This is an area we are getting into carefully as managing and overseeing creative talent is not easy to do.” That said, King insists media services agencies have an advantage over the full service set up: being a much younger business, “it’s much easier for us to re-engineer the business than the full service creative agencies” .
As marketing moves from analog to digital, the question that everyone wants to know is whether spends on the digital medium are increasing as an overall percentage of advertising expenditure. Digital expenditure is about 9%-10 % of all advertising spends and will be close to 11% by next year. “You already have a category that’s overtaken radio and cinema, and will probably overtake magazines next year,” King says.The medium is generally being driven by advertisers who are looking for a connection with consumers that’s generally made by the Internet — pure play internet companies like e-bay , holidays, comparison-based purchase categories and so on. Digital need not necessarily mean only the internet, of course. In Japan, for instance, mobile phones are a great medium to push digital communication as 30% of phones have cash cards. “Digital communications is changing the world rapidly from pushing out mass messages to thinking about consumers pulling in messages. It provides an absolute degree of accountability that’s not there in other media — cost per click, cost per acquisition or cost per engagement . Mobile is also big,” King explains.
With digital becoming such an important medium , there is growing concern about the ad industry being threatened not only by the likes of Google and Yahoo!, but also by the large global telecom service providers. King, however, doesn’t buy into this scare-mongering : “I think it’s the opposite. All internet companies and cellular phone service providers say that their business will be reliant on the advertising model. Rather than thinking of them as a threat, we have far more people chasing ad dollars and expecting the cake to grow exponentially.”
But media agencies need to click on the new without letting go of traditional media. And the key is to synergise the analog era with the digital age. “Clients look at media efforts in a collective way,” says King. Apart from an array of offerings for direct marketing, sponsorships, entertainment and others, Publicis Groupe, the parent of ZenithOptimedia, announced the launch of a pure play digital agency, VivaKi.
The new agency is a combination of the autonomous operations of network cousins Starcom Mediavest, Digitas, Denuo and ZenithOptimedia in the digital domain. “VivaKi is an example of how our group can take an accelerated step to work with a set-up where a digital agency combined with two media companies will provide an opportunity to invest in areas where we would not have invested in isolation,” King explains. If that model clicks, VivaKi, which was launched about a month back, will ensure that the good times continue to roll.