Change and consolidation: dominant themes for media in 2020
Laetitia Zinetti, Managing Director, Continental Europe
Thursday, December 12, 2019
2020 promises to be another year of significant flux in the global media industry, with more brands reviewing relationships with their media agencies of record than at any time in the past five years. 2015 was dubbed ‘Mediapalooza’, with up to $30bn in media spend up for tender. And if predictions in the ad industry bible Campaign are borne out, 2020 could be just as busy as 2015, as advertisers look to manage cost and improve strategy. For next year alone, it’s claimed that there could be as many as six global pitches for brands with $1bn-plus media budgets.
With advertisers and agencies planning for a busy year, we recently asked 20 of Ebiquity’s lead media consultants in major global markets – across the Americas, Europe, South East Asia, and Australasia – what they predict for media in 2020. These are the headline findings.
• Billings up for review in 2020 are likely at least to match levels seen in 2019
• The three main reasons for advertisers reviewing agencies will be:
(i) contracts ending,
(ii) advertisers looking for partners with the right strategic capabilities, and,
(iii) enhanced ROI
• Agency holding companies are simplifying their offer and at the same time increasing capabilities. This will mean that holding companies will represent the most popular operating model for, at least the short term.
• There will be a shift from brands looking for global expertise to regional and local
Ebiquity media leads believe that 2020 will see either the same number of agency reviews or, indeed, more than have taken place in 2019. Total media reviewed this past year looks likely to have topped $20bn. We don’t believe that there will either be “a lot more” or “a lot less” – the trend is either constant or a modest increase. No single sector will dominate reviews next year, with FMCG, retail, media, and government accounts all likely to assess agency support in 2020. We know of multiple brands in multiple markets from those sectors that propose reviewing agency resource next year.
Motivations for review
We asked our lead media consultants to rank seven different motivations advertisers have for reviewing their agency partners as reasons for change in 2020. In order of popularity, the three most popular drivers of change were identified as:
- The advertiser-agency contract coming to an end, requiring a formal review
- Advertisers questioning their current agencies’ strategic capabilities, looking to find the right fit with the right agency partners
- Driving return on investment to deliver enhanced commercial value and savings
The first and the third motivations have been constants in recent years, but the second appears to be net new. We believe this is driven by in-house teams’ increased confidence in seeking out the right strategic fit to meet each company and brand’s specific needs.
Our media leads believe that the two least important motivators for review in 2020 will be the desire among advertisers to simplify media rosters and chemistry with the media agency team. Interestingly, this was followed by “desire for greater transparency”, suggesting that brands are increasingly in the driving seat when it comes to transparency.
Agency operating models
In the recent past – accelerated over the past year – agency holding companies have simplified their offerings and augmented their capabilities. As a result, we propose that
the single agency holding company will continue to be the most popular operating model for the short to medium term. Ebiquity’s media leads believe that brands will choose holding companies as the principal way they plan and buy media and marketing campaigns next year. But built-in flexibility and taking more control will also be important, with in-housing or hybrid models – where both agencies and advertisers themselves both look after media investment – also popular with advertisers in 2020.
Alternative operating models start from a low base, and while currently small will also likely continue to grow in popularity, These include management consultancies, separate planning and buying agencies, and independent media agencies.
From global to local
While media agency reviews – particularly the headline-grabbing, billion-dollar reviews – have been dominated by global concerns in recent years, Ebiquity media leads believe that in 2020 it is first local and then regional concerns that will drive reviews and decision-making. For most advertisers, we believe that a local geography will be next year’s focus, with regional and global geographies less important as drivers for change overall. This trend started to filter through in requests for proposals from agency partners and represents the culmination of a trend that we first observed four years ago.
The rate of change in media and marketing shows no sign of slowing down, but the centre of gravity in the relationship between advertisers and their media agencies of record appears to be swinging back in favour of brands. This is as it should be, as it’s advertisers’ spend which funds the entire ecosystem. That said, as Ebiquity’s media leads in many different markets around the world have observed time and again, those relationships that endure and deliver the most impactful results are those that grow to become genuine partnerships. That’s why we’re keen to help ensure that more advertisers work with the right partners for the right reasons and with the right operating model, in 2020 and beyond.
The piece was co-authored with Priya Thakorbhai Patel, Principal Consultant, Media.