Media Agencies Try to Navigate Choppy Waters

At Venice Festival, Shops Ponder Their Place in Increasingly Digital World

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VENICE, Italy ( -- If you went to the Venice Festival of Media this year, you couldn't help but think about profit margins. Not the slim ones of media agencies, but the presumably fat margins of the water taxis that are the fastest and most expensive way to zip around the collection of islands that make up this old city.
Venice Festival of Media 2008
Photo: Jonah Bloom

Now in its second year, the Venice Festival of Media is meant to be the media-buyer and -planner community's version of Cannes.

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Even a short trip, say 15 or 20 minutes, could run as much as 100 euros -- or about $160 -- all for the privilege of a pitched, bouncy, herky-jerky ride that on a bleary morning might conjure stern memories of the previous night's bellinis. Propping up the taxi companies, which are the only option for harried visitors, is a basic economic principle: a scarcity of ways to get the job done.

No such luck for today's media agencies.

A predominant theme running through the presentations and panel discussions was that in today's advertising marketplace, there is no end to the competition for two roles the media agency is vying for: the seat at the right hand of the marketing team, directing its advertising spending, and the role of content czar (or "content jockeys," as Universal McCann CEO Nick Brien put it), managing the endless geyser of content big brands let loose today. The scrum includes parties as diverse as production houses cranking out branded content; consumers who have involved themselves in the branding process; and, of course, the ad agencies off of which media shops were spun -- perhaps mistakenly -- more than a decade ago.

Lingering insecurity
That question of whether the two agencies should be reunited, or rebundled, long a soapbox issue for creatives, got little truck with a crowd clearly reveling in its independence. But that doesn't mean the media agencies have worked out the inferiority complex that so often drives them to navel gazing at these events. One of the audience-poll questions asked whether media agencies are set up to become strategic leaders for brands -- a tee-up, you'd think, given the audience. Yet the crowd was divided just about evenly among the three possible answers: yes, no and not yet.

You could argue that a third wasn't a bad vote of confidence given that most of their agencies weren't even around 15 years ago. But somehow it's hard to escape the feeling that if you have to ask whether you're in power, then you're probably not.

That's where the Venice Festival of Media comes in. Now in its second year, the conference is meant to be the media-buyer and -planner community's version of Cannes, with the crumbling beauty of the palazzo-lined canals standing in for the crumbling beauty of La Croisette. The Venice event has a long way to go to match the liver-besieging week of the Cannes awards for decadence, scale or centrality in the industry. But it already rivals it for logistical nightmares. The 850 attendees -- twice last year's turnout -- were spread out among hotels on different land masses, putting large amounts of power in the hands of those sunburned water-taxi drivers and giving reason for griping. Venice very quickly emerges as a curious choice of venue for anyone working on anything resembling a schedule.

Nevertheless, most polled said they'd come back next year, even if they coupled their logistical complaints with a few quips about the dullness of much of the content. It's their event and, in a short time, a sense of ownership has developed, a cheering development for master of ceremonies Charlie Crowe, chief executive of festival owner and organizer C-Squared. In just a year's time, the buoyant, pocket-squared Mr. Crowe capitalized on the inaugural buzz and made the festival something approaching a must-attend, if more for the networking than the panels.

Talking to themselves
A clear challenge for the third installment will be to improve the content. Too much of this year's festival was dominated by stale discussions of media planning, hackneyed calls for more digital competence, and meditations on branded content that anyone who's picked up a trade magazine would know inside and out. The big names were there onstage -- Jack Klues, a thundering Alexander Schmidt-Vogel -- but they weren't challenged enough. Hot-button issues such as the rebates agencies receive in many parts of the world were given too-short shrift in light of how important they are to local buyers and sellers. And, typical of an ad conference, there was too much of the industry talking to itself.

The high point contentwise was most certainly a series of panels of media-agency CEOs. One British attendee describe the two-hour session as "a bit knockabout" on the way out, as good a descriptor as any, even if there weren't any major disputes. The panels offered a rare chance to see the people who control a massive chunk of the world's media spending on one stage, and it was a clear framing of the challenges facing media shops by the people who run them.

A major continuing challenge is the deep involvement of procurement executives in marketing processes putting downward pressure on the profitability of agencies of all kinds. For all the talk about strategic value and making investments in technology, said MindShare CEO Dominic Proctor, "five minutes later we're in a haggling match over whether it's a 1% or 2% [fee] on a service. That's a habit we have to break."

With that, Mr. Proctor hit on one of most difficult contradictions facing agencies. Just about everyone agrees the media world is increasingly confusing and requires smart strategists to navigate it. We also know that brands have never been so important to the C-suite. Yet the threat of agency commoditization looms as large as ever. While procurement is often the whipping boy in these situations, one agency CEO argued that corporate bean counters -- or, for that matter, clients and media sellers -- can't be blamed if media agencies don't continue their ascent.

"More than any other time in the last 20 years, our destiny is in our hands," said Steve King, worldwide CEO of ZenithOptimedia.
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