Last week, NZ Herald’s Media Insider reported Health NZ’s plan to consolidate its media planning and buying into one media agency “for scale and capacity”. However, The Media Lab’s Antony Young argues that the world of media has changed, and the bulk-buying model may no longer be the most effective.
Health NZ’s decision has me asking the question: “are centralised media appointments still relevant in this day and age – and is it the right thing for an advertiser?”
It is reported that the government agency is making this move for “greater value for money” and “increased control and oversight” for its $15 million budget. As a taxpayer, what’s not to like about this? But the media and agency worlds are going through enormous disruption that means buying media, let alone planning it requires a different, better solution to the bulk buying model.
Volume no longer guarantees a better deal
The 1980s gave birth to large scale media buyers entering the advertising industry. In the UK, Saatchi & Saatchi, then the world’s biggest advertising agency, merged its media department with Bates Dorland and Ray Morgan and Partners to establish the massive media buying shop Zenith, joining media independents Carat and CIA in Europe.
The US quickly followed suit and within a decade media buying was consolidated into a handful of massive global holding companies such as WPP, Publicis, Omnicom and IPG.
Client companies, prompted by successive recessions, centralised their media buys into a single media agency of record in order to improve their bottom lines with the promise of bigger buying clout, higher discounts, and more operational efficiencies.
When I was in the UK, my media client at Masterfoods, makers of petfood brands Whiskas and Pedigree, previously supervised the purchase of tin. He claimed just like tin, media was a commodity and so the lowest price was their priority.
The media industry has shifted enormously since those days.
Today, Google and Meta account for 60-65% of advertising media budgets in NZ. Neither of those two companies provide volume discounts as their scale dwarfs the agencies. Meanwhile, media is fast shifting to programmatic (auction-based media), buying where the market price is automated based on supply and demand, not agency deals.
Scale can reduce effectiveness with fragmented audiences
In truth, many government priority audiences are relatively small, for example, recent migrants, disabled communities, at-risk youth, older Māori. From our experience these audiences are often reached most effectively through community media, ethnic media, trusted influencers, local partnerships and highly targeted digital channels, not your traditional media outlets. These approaches require deep local knowledge and extensive manual planning. They are not necessarily scalable.
In fact, some of the most effective government communications are intentionally unscalable because they rely on trust rather than reach.
Last year, we planned a campaign to promote gambling harm awareness to Asian communities. Instead of just buying traditional media slots, we secured mini posters inside Indian, Thai and Vietnamese restaurants and distributed disposable chopsticks with custom messaging at Chinese takeaways. An agency of record (AOR) isn’t going to give you that level of grass roots targeting.
While procurement values consistency, governance, process compliance and supplier consolidation, none of these address “how effectively did we change behaviour?”
Global holding companies disrupted
Right now, the global holding agency companies are going through substantial upheaval. In the last nine months: Omnicom went through a huge acquisition of IPG that has seen major disruption for its agencies. We saw very formidable government advertising agency brands Clemenger and FCB disappear in Wellington to form McCanns.
WPP is in disarray with its global CEO replaced and the restructuring of its agencies into one operating unit. Dentsu has been trying to sell its agencies and is unable to find a buyer. These global holding companies that own the likes of MBM, OMD, Spark Foundry and Y&R locally, have openly stated they are expanding their principal media operations. Principal media is the contentious practice of securing media on the wholesale media market and selling it to clients at undisclosed media pricing under the guise of data targeting.
This controversial service has sparked concerns by the world’s largest advertisers as conflict of interest and lacking transparency, while the global agency networks see it as opportunities to improve their margin and company valuations.
Streamlining planning reduces diversity of thinking
A common weakness of media agency of record arrangements is the assumption that efficiencies come from applying standardised planning processes across multiple campaigns.
For government campaigns especially with the likes of Health NZ, there is no such thing as a single audience. A single year will include campaigns targeting Māori whānau, Pacific communities, Asian New Zealanders, young adults, rural communities, health professionals, smokers, vapers, people at risk of diabetes and people eligible for screening programmes. Each audience has different cultural contexts, trusted messengers, different motivations and fears.
The planning challenge is therefore one of customisation, not standardisation. The more planning becomes centralised, the greater the risk that nuanced audience understanding is replaced by process efficiency.
Behaviour change campaigns require bespoke planning. A campaign designed to increase cervical screening participation should not be planned the same way as a campaign designed to reduce vaping among teenagers.
Yet, large consolidated arrangements can create pressure to use common frameworks, common channel mixes and common planning models.
The result can be operational efficiency but strategic mediocrity.
AI weakens the scale argument
The old agency FTE based charging model is crumbling. Last year in the UK, 14% of advertising jobs were downsized as a result of AI. We are only at the early point of how AI will reduce layers of staffing at media shops, but it’s become clear to me that the way agencies operate is going to shift dramatically to the point that only a few people will be needed to do the job of dozens.
So why would a big agency with more clients and staff be best placed to deliver the operational efficiencies that an advertiser like Health NZ now want?
AI has already improved our agency speed and efficiency three to five-fold when it comes to audience analysis, media modelling, campaign reporting and optimisation. There’s a case that small independents will be able to deliver those efficiencies better as they don’t have the baggage of network and group overheads to pay for.
The case for small, custom planning
Ultimately in today’s media and agency landscape, it’s the talent that will deliver media efficiencies and effectiveness. A large-scale media agency cannot negotiate a better CPM on Facebook or YouTube than a highly capable independent agency.
The competitive advantage has shifted from buying power to intelligence. It is agility, accountability, local market understanding and senior strategic expertise.
Large scale AOR media planning and buying offers less, not more. Less creativity. Less customised planning. Less speed. Less transparency.
Small, strategic and agile is the new media advantage.
