The whole ecosystem is in a tricky place right now.” (Anne Dearnaley, PHD South Africa)

A recent survey of multinational marketers revealed startlingly high levels of dissatisfaction with their current agency roster arrangements, and brands around the world have initiated media agency reviews. The heads of South African agencies give their views on what’s going on.

Headlines in the international marketing press are sounding alarm bells about the future of media agencies. They speak of media shops facing identity crises. They warn that agencies might follow the dinosaurs if they do not tackle transparency. A recent survey shows multinational marketers scoring their current agency roster arrangements at 5.7 out of 10. (Source: The Future of Agency Rosters by the World Federation of Advertisers and strategic partner The Observatory International). Media agencies are but one of the disciplines in the spectrum of marketing services which face the underlying paradox highlighted by the survey: six out of ten clients indicated they were looking to reduce the number of agencies they worked with, but five out of ten claimed to be intending to increase the number of specialists they use.

There are two big threats on everyone’s lips: one being the dangerous duopoly of Facebook and Google, and the other being the consultants ­– PWC, Accenture, Deloitte and the like.

Anne Dearnaley, CEO of PHD South Africa, points to “transparency as an ongoing threat to the entire industry”. She acknowledges that the advertising and media industry has, and is, undergoing profound change – “the whole ecosystem is in a pretty tricky place right now”.

Dearnaley argues that it is the responsibility of leaders to evolve their businesses to embrace change and mitigate the threats. She cites the rise of digital as once having been a threat to the traditional media agency, but points out that PHD now has a 20-strong in-house digital team. The profitable and successful embrace of digital is a recurrent theme among local agency leaders, providing a reassuring example of the industry’s ability to evolve.

Some argue the South African market has been slow to invest in diversified services, in part because there are still a lot of traditional advertisers.

Dearnaley cites the recent launch of an econometric division, led by Deborah Schepers, as PHD’s current focus. This allows them to finally answer the question of “which half of my advertising is working?” and guide clients to make informed decisions, ranging from “how much do we need to spend for uplift and where should we spend?” to “what durations and formats are effective?” This is a decisive move into the consulting space. Interestingly, Schepers points out that it requires professionalism and maturity to be able to hear the bad news, which may be delivered from a clinically objective statistical approach.

Clearly, there are no fast or imminent answers to how media agencies will evolve in the broader marketing context. South Africa has the advantage of being able to draw from more advanced and differently evolving markets. Its media agency leaders are, on the whole, buoyant and bullish, keen to embrace the challenge of ongoing change and development. That suggests that they should be OK, or more than OK.

The full article with commentary from a number of media agency heads was authored by Britta Reid and published in themediaonline.co.za.