German telecommunications giant Deutsche Telekom is rolling out a new media operating model in Europe that takes the strategy portion in-house and farms out other media tasks to different agencies, calling it a "radical redefinition" of its media management approach. But it says it won't have any implications on how subsidiary T-Mobile U.S. handles its own media.
The company said it last did a major, open media pitch over a decade ago, and has worked with GroupM agencies in Europe since then. When it decided to run another pitch last year, it realized how much the media world had changed, and decided it would look for a new kind of model, says Christian Hahn, VP of Marketing, Communications Strategy at Deutsche Telekom.
The company has broken up its media processes into five "Lots": media strategy and steering; media analytics services; campaign planning and buying services; programmatic buying operation services; and search advertising and affiliate marketing services.
The media strategy and steering will come in-house at Deutsche Telekom and serve as a sort of central nervous system for the rest of its agency partnerships. The company has chosen to delegate campaign planning and buying services to GroupM, and says it's close to making decisions for who will handle programmatic and media analytics. It just began the process to find an agency for search advertising and affiliate marketing, so that decision will likely take longer than the others. The new collaboration will affect the company's European footprint, consisting of 13 Telekom subsidiaries, and is supposed to kick off on Jan. 1, 2018.
GroupM deferred comment to its client.
One goal of this new model is "to have much more media-neutral planning and a lot more transparency within the system," says Gerhard Louw, who leads International Media Management at Deutsche Telekom. "In our industry, people are used to giving all these tasks to an agency or an agency group" to make them easier to manage, Louw says. "We want to have more control."
The overhaul doesn't mean anything for T-Mobile's U.S. media, the subsidiary says, though Deutsche Telekom is a majority shareholder in T-Mobile U.S. The U.S. company currently works with Publicis Media-owned Blue 449 for the brunt of its media, it says.
As many marketers opt to consolidate their agency relationships with one holding compan, Hahn says it made sense for his company to choose the best agencies for each topic and take the helm in the center.
But those agencies also had to demonstrate a willingness to work with others, Hahn says. "They understand that we would like to run a new model," he says.
Other companies could follow.
"The fragmentation of an agency's scope is likely to be a trend," says Tom Denford, co-founder and chief strategy officer of London-based advertising consultancy ID Comms. "We're seeing it a lot in briefs." ID Comms and McKinsey have worked with Deutsche Telekom on its media efforts.
Amid flare-ups around areas like brand safety and non-transparent fees in the advertising industry, Forrester analyst Jay Pattisall says the trend of bringing some advertising-related services in-house while outsourcing others to agencies is a trend that will continue to happen.
"I believe that marketers are starting to bring select agency services in-house as a means to have governance over their brand, their brand safety [and] their data," he says. "And then it really becomes a question for them of which services are they capable of and make the right sense to do so?"
Though Deutsche Telekom believes this is a futuristic model for its own brand, there's likely no one-size-fits-all model for how companies work with their agencies.
"I believe it's likely different for each marketer just given the business, their access to talent, their circumstances [and] where they are in the digitalization of their business models," Pattisall says.