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by Martin MacGregor (@MartMacG) The recent shift in the media industry to nett rate cards should demystify media costs and their relationship to the very badly named agency commission. It’s about time.

It has always amazed me how certain industries have mastered the art of getting people to feel comfortable paying month after month without really understanding what they are paying for. Common sense gets thrown out the window, and complex words and unexplained increases are accepted as the norm. Whether its short-term insurance, purchasing an RA or even your cellphone bill, you can never really say how the costs are made up, or whether they are justified or not.

Being discredited

The media industry was being discredited — and rightly so — by media agencies taking advantage of client ignorance, or laziness, by using the lack of understanding of the media rate card to build extra margin into what they were charging. I’d been finding clients asking more and more questions around media rates and exactly how they are made up. Some of the asking was polite, but some was downright cynical, based upon previous experience of essentially being ripped off.

As of 1 May 2016, most media owners have changed their rate cards to reflect their rates, no longer including the 16.5% agency commission. The reason for including commission is lost in the mists of time but has allowed years of confusion around what the real media rate is. I believe this is a watershed moment for media agencies and offers an opportunity to change client perception around the value of media strategy and the transparency of the industry.

Value in two key areas

Clients should be looking for value in two key areas from their media agency:

  1. Smart strategic thinking that understands business objectives, the potential of the creative idea, media-consumption insights and the breadth of touchpoint opportunities which together deliver a results-orientated media strategy and plan.
  2. Strong negotiation skills and constructive relationships with media owners that unlock the right opportunities and executional outcomes for any campaign — at the right price.

Weigh costs against outcomes

When remunerating media agencies, the costs should be weighed up against these two outcomes. Clarity now exists for media rates, so the discussion should now move away from anything commission-related to one that is scope-based. For the first area of value, this should be a fee and, for the second area, a more-creative approach around grading relationships across media owners and comparing the value (not only discount) negotiated year on year.

This is the time for media agencies to really push transparency. It will go a long way to rebuilding industry credibility, and clients will have a much better idea of what they are paying for — and see the real value that good media agencies can bring them.

 

Martin MacGregorMartin MacGregor (@MartMacG) is managing director of Connect, an M&C Saatchi Company, with offices in Johannesburg and Cape Town. Martin has spent 18 years in the industry, and has previously worked at Ogilvy and was MD of MEC Nota Bene in Cape Town. He contributes the monthly “Media Redefined” column, in which he challenges norms in the media space, to MarkLives.com.

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