Competition is always tough amongst ad agencies. And soon it may get even tougher. That's because media companies are moving in on agency territory.

In an article discussing Conde Nast's new creative services offering, AdAge's Brian Steinberg points out that "no one can really say they corner the market on how to make things work in paid search, social media, or mobile marketing." So some media companies are likely to follow Conde Nast's lead in taking advantage of their unique positions to expand their relationships with marketers, and, they hope, their bottom lines.

For Conde Nast, the decision to move into agency territory was a no brainer. Drew Schutte, the company's Chief Revenue Officer, explained to AdAge:

Last year we were doing over 30 custom programs per quarter, and now we're doing 50, and often people were asking us, "I have this other thing I need you to do." And we had to pass on it. So we thought, "Why are we turning them away?"

Other media companies will probably start asking themselves the same question at some point. After all, it's a multi-channel world, and increasingly media companies are having to build a presence in multiple channels if they hope to continue reaching consumers. That means they often have hands-on experience with channels that many agencies can't legitimately claim to have expertise in. So it's natural that a growing number of marketers would be open to working with a media company instead of an agency.

This is especially true in the digital realm. While many big agencies have beefed up their digital capabilities and Steinberg is correct to note that agencies "have a more-pronounced expertise in helping advertisers build identifiable products over a longer period of time", digital moves quickly. A media company's first-hand experience in the digital trenches may make up for any shortcomings elsewhere.

In my opinion, the most positive thing that can emerge from the trend of media companies moving into agency territory is a closer alignment between the interests of the media company and marketers. All too often, the relationship doesn't go much further after ad inventory is exchanged for money. While it's not fair to say that everything is 'wham, bam, thank you ma'am', I think there's a lot to be gained when media companies work more closely with marketers. At the very least, the added competition from savvy media companies should help agencies step up their game, which will benefit marketers no matter who they choose to work with.

On that note, there's no reason this trend should be limited to large media companies. Smaller digital publishers would be wise to take a cue here. They may not take an agency role a la Conde Nast, but smaller publishers can play a big role in making sure that the marketers they sell inventory to are developing campaigns that will be effective. After all, the publishers know their products, audiences, and mediums best. When that knowledge is put to good use, added revenue may just follow.

Patricio Robles

Published 26 April, 2010 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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Comments (5)

Benin Brown

Benin Brown, EMarketer at RBT

I agree this trend has been in the making for some time. I think Patricia is correct and I'd say that there isn't just one reason for this trend, rather there are several catalysts.

  • The proliferation of ad networks has greatly depressed ad inventory pricing
  • Consumers are growing more skeptical of push marketing techniques 
  • There has been a perception that agencies do not always act in the clients best interest
  • The ever increasing demand for performance driven marketing is causing marketers and publishers to go back to the drawing board
When you tie all of these drivers in together it says that publishers will not only become agencies, but they will also begin to alter what we think of as advertising. Translation...the future holds more specialized content and premium media production which will soon begin to replace CPM display advertising and publishers/media companies will lead the charge. 

about 8 years ago

Wyndham Lewis

Wyndham Lewis, Head of Business Development at Harvest Digital

It is one thing for a media company to support production, it is another thing for them to become an agency. 

There is a greater likelihood that the agency will become the media company.  The larger agency networks are increasing their production arms and starting to develop media for their clients that they can then distribute across multiple channels. 

The issue for media companies is that their relevance and advertising revenue comes from their market authority and supposed neutrality.  To an extent they are also dependent on the agencies for revenue.  Media needs to evolve its offerings and regain their intermediary and authority position between the buyers and sellers of services.  But if media ends up in competition with their clients then it won't be too long before they are forced to make a complete transition as the bulk of their traditional revenues will be impacted.

about 8 years ago

Benin Brown

Benin Brown, EMarketer at RBT

Very insightful point Wyndam, I'm glad you mentioned it too because its something I've been thinking about a lot lately-the notion of what makes a site or publisher have authority...

You are correct, neutrality is or has been critical for establishing authority and credibility-especially during the reign of traditional media.  However, I'd pose the question to you of whether in this age of "Tribes" as Seth Godin calls it, neutrality still holds the same sway over audiences that it once did? 

Judging from media companies such as Vice and Conde Nast I'd have to say that publishers and their audiences are redefining authority and relevance.  I mentioned Vice because they are one of the most well known publications running an in-house agency.  It looks like what their audience values over neutrality is "staying true to their core audience" its almost as if they are able to take that cult-like following and do what ever it is that they want to do with it-as long as they don't deviate from the core values of their audience.

Publications such as Vice that occupy a tight niche and take an entrepreneurial approach are going to continue the trend of ditching their agencies in favor of their own in house ones and its just something that the industry will have to adapt to.  

Today's technology gives publications as much if not more access to metric data such as personas, demographics, and engagement as agencies have access to + this same technology puts the consumers(businesses in the case of publishers) face to face with the brands meaning unless an agency can offer the publication some real kick butt value then the publication would be hard pressed not to try and remove the middle man.

about 8 years ago

Julian Grainger

Julian Grainger, Director of Media Strategy at Unique Digital

Really? Does anyone think for a minute that a publisher is always going to act in the best interests of the client by booking them into a competitor publication that is better than their own? It would be dangerous to assume the publisher is not going to act solely in their own interests. And before someone says it, agencies also act in its own interests. This is by doing the best strategy with the best media solutions for their clients. I just can't see a publisher taking a neutral view.

about 8 years ago

Wyndham Lewis

Wyndham Lewis, Head of Business Development at Harvest Digital

Market neutrality doesn't mean excluding self interest.  It means that you can provide content that is not unduly influenced through advertising revenue.  Imagine Vogue pushing Top Shop because Conde Naste took agency responsibility for them.  Vogue's authority and position comes from its ability to identify winners and losers in fashion and comment on them as market authorities.  As long as people perceive them to operate like this they will be successful. 

Julian's point illustrates the issue with the initial concept that media companies could become agencies.  Agencies are media/channel agnostic whilst the media companies can only generate revenue from the distribution and content they own.  If Conde Naste were your agency how likely would they be to create a strategy that gave ad spend to their rivals.

Media companies selling production capabilities yes, becoming agencies no.

about 8 years ago

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