Something Stinks When Media Sellers Go Directly to Clients

For marketers that retain ad agencies, a direct pitch from a media seller indicates that something’s rotten. It might be that the agency isn’t doing its job correctly, forcing the media vendor to go around it.

Or it might just be that the media seller hopes to exploit the ignorance of the agency’s client, getting an overly rich price or getting onto a buy the site has no business making because of its inappropriate targeting.

When sellers start calling a company that has an agency, the marketing people have to ask themselves, “Is this because our agency is failing, or because the selling community believes we’ve become suckers?”

The Bad Agency

Agencies that arbitrarily reject sites without good reason will find that sites will run back directly to the client as sort of an “appeals” process. When clients see a great number of sites doing this, they should raise their scrutiny level of the agency’s criteria for site selection.

Sometimes agencies fall into this out of laziness, keeping the same sites on the buy that they’ve bought previously or perhaps bought for other clients. Unfortunately, it’s fairly common to see agencies grow to overly rely on some of the larger sites and networks just to keep their own transaction costs down. It’s hard to deal with many different sites, especially with highly specific targeting options, such as keywords. If you see the same sites on your buys campaign after campaign — especially the larger general sites, such as Yahoo, MSN, and AOL, and networks such as DoubleClick — despite having different objectives for each effort, you should start to get worried.

Don’t Undercut Your Agency’s Negotiating Power

The trick is to decide if your agency is blind in just one instance or if it’s merely incompetent overall. I don’t think it serves either situation to go around the agency and make your own media deal directly with the site. If the agency’s bad, it needs to be fired — fast. If the marketer is convinced that the agency made a mistake leaving off a site, but it’s an unusual sort of error for the agency to make, then the marketer needs to support its agency.

Marketers that sometimes make their own deals, especially after the agency has already refused a particular media vendor, greatly undercut the negotiating credibility that the agency can use to get better deals for the client. It’s the old “mom and dad” problem: When a child is refused permission to have candy by the mom, a dad who says yes will undercut the mother’s authority.

I think it’s fine for clients to fire their agencies and do their own media buying. But it’s the worst of both worlds to retain an agency and then meddle.

The Opportunistic Seller

Sometimes, a vendor going directly to a marketer is merely a case of the seller trying to exploit the weakest negotiating link.

Marketers themselves seldom have the quantity and diversity of experience in negotiating media deals for specific campaign objectives that agency media buyers do. An agency may have dealt with a particular site many times before for other clients and for other purposes — knowing what subsequent results occurred — but the marketers often know only about as much as the vendor tells them. Understanding this, the rational media seller — particularly the sales agent for a site that has generally under-performed — would much rather deal with the marketer than an agency.

Institutionalizing Opportunism

Large media companies, such as AOL, Yahoo, and MSN, have even structured themselves to have different sales teams go after the different types of opportunities. One sales group concentrates on agencies; the other looks for client-side weaknesses and exploits companies that have poor agency relationships.

If despite your having retained an agency your account is assigned to the latter division of these sites’ sales groups, that should tell you that your company is painted by the sales side of the industry as “easy money.” Either you need to do a better job of letting your agency do its job, or you need to get a new agency.

Consequences

We saw a great number of bad deals go through a few years ago, when the big sites were eager to strike then-called “sponsorships.” As defined back in less-rational times, “sponsorship” meant a media deal in which great numbers of impressions were bought without strict data-tracking requirements, for exorbitant cost per thousands (CPMs), in exchange for exclusive relationships. It was sort of like saying, “You can buy this inoperable car for $240,000, and we won’t offer a similar car to anyone else.”

Marketers bought them like hotcakes, mostly because it allowed them to write press releases with titles like, “Company X Does Deal With Yahoo” back when doing a “deal” with Yahoo was enough to tack on another 20 percent to a publicly traded stock.

I think it says good things about ad agencies that they were the ones who fairly consistently rejected these types of deals, insisting stubbornly on things such as efficient rates and good value propositions. At least most of them did.

When most marketers abrogated these unreasonable contracts last year and this year, after realizing their errors, it helped start the Internet “bust.” It wasn’t that ad revenues went down. In fact, they continue to go up, albeit at a slower rate. The perception of an industry recession started when the revenues already recognized by these large companies suddenly disappeared. To Wall Street, the ad revenues were shrinking (because of revenue-recognition policies) even while new orders were rising.

I would attempt to draw the conclusion that it is therefore in everyone’s interests — buyers’ and sellers’ — to respect existing agency relationships, but I’m not naive enough to think that sellers and buyers will behave altruistically. In fact, it’s in the interests of any individual seller to exploit the heck out of those “easy money” marketers who denigrate their agency’s negotiating authority. It has to be up to the marketers to protect themselves.

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