By: Devashish Bajaj --
01 January, 2017
Media is one of many mature categories accounting for about 70% of the advertising spend of large advertisers. In recent years, economic factors such as inflation, economic slowdown in China and Europe are restricting internal marketing budgets.
To cut costs and maintain high quality, procurement teams across industries have been negotiating with the agencies on billing rates.
Media agencies have a complex structure and the responsibilities of its personnel are not defined. While media planners can perform both traditional and digital media planning, many agencies offer only specialized planners for digital media which increases the cost for marketers. A group media director and an associate media director have similar roles. However, the hourly rate of a group media director is 14% higher than an associate media director’s rate. Agencies for better margins utilize senior personnel, thereby increasing the FTE cost to the buyer. The effort estimation can be done based on initial or mature stage of the contract with the agency.
During the initial stage of the contract, the agency’s focus is to align with the buyer’s objectives and build a stronger relationship. Top brass such as COO and CFO get directly involved with the buyer. Supervisors’ involvement is also higher in the first year and in many cases they will be the single point of contact for a new account. They oversee planning and strategy, and guide their subordinates. The senior level-billing is high at this stage.
During the mature stage of the contract, the agency is better aligned with the buyer’s business objectives. The head of the agency now prioritize buyer satisfaction and strategy and let the senior personnel take control of the daily activities and resolve issues.
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