Brand Republic in the UK today reports that GM is likely to review its European media assignment and that it “is looking at a break up of its media account along individual car brand lines a method it practices with its creative business”.
If this is true the implications are significant and will reach far beyond the automotive market. Consolidation in the media agency market means that there are less media agencies (certainly at the holding company level) than there are car manufacturers. As a consequence the agency sector has had to develop firewalls between their own agency brands and sometimes between account teams in a single agency. This is seen by manufacturers as a reasonable solution because they realise that media agencies serve corporations as well as the brands owned by those corporations. What this means is that clients understand the benefits of trading aggregated media volume and also the need to manage budgets at a portfolio level.
While the manufacturers have remained consolidated this has been a reasonable way to maintain security and price advantage. If, on the other hand, manufacturers make brand level appointments such strategies will become impractical,claims of perfect confidentiality implausible and portfolio management of budgets impossible.
Three things can happen as a result of this. The first is a massive fragmentation of agency brands, an option that is economically impossible for those agencies and that will result in a loss of economies of scale and rising costs for advertisers who just can’t afford to pay more. The second is a separation of functions in which the trading of media is separated absolutely from planning in which manaufacturers fragment at one level and consolidate at the other. This is also far from cost free.
The third is a wholesale reassessment of what ‘client conflict’ really means and a view of the potential harm that it creates with the possible conclusion that the value of expertise is greater than the threat of sleeping with the enemy. If option three prevails it might represent a new dawn for the agency business – always remember two’s a conflict three’s a specialty!