Why Facebook’s $750 million media review has agencies buzzing
Facebook’s global media review is sure to be one of the most talked-about deals in the ad world for the next year, as agencies navigate potential conflicts and politics in the quest for the $750 million account.
First, there’s the sheer size of the business. Three quarters of a billion-dollar accounts don’t come around every day. And second, there’s the fact that it’s a media company that brings in $85 billion a year in ad revenue—and the shops that pitch the account also represent clients who buy Facebook inventory. As with any media account this massive, there may be a temptation for agencies to sweeten the pot by ramping up spending on Facebook in an effort to win the business.
At the same time, Facebook is reviewing creative agencies to work with its in-house shop, Creative X, and has brought on a new shop for Instagram, Johannes Leonardo.
Making the narrative even more compelling is the fact that Facebook has been besieged by regulators and governments. Facebook has weathered high-profile boycotts and brand safety issues. As such, Facebook could use the reviews to help rebuild relationships with the ad community.
“This is going to be a very challenging assignment for any agency group,” says Greg Paull, principal at R3 Worldwide, which is not affiliated with the Facebook pitch. “Facebook is probably a top three vendor of all the participating holding groups, and will have baked-in unique arrangements with all of them.”
Facebook declined to comment about how it will handle potential conflicts, but a person close to the review process says the company will be diligent about not mixing its ad sales goals with the review, especially since the platform is already under a microscope and any missteps would just mean more headaches.
“The conspiracy theory is Facebook is doing this to flush out more spend from agencies,” says an executive, who is a close Facebook advertising partner and spoke on condition of anonymity, before adding: “I don’t know how real that is.”
“We’re all spending with them,” the same agency exec says. “Facebook is reviewing if spend is up, is it down, and what the general attitude toward spending is in the future.”
This isn’t the first time such speculation has cropped up with a major media account. In 2019, Disney conducted a $2.2 billion media review, and there was talk—never proven—that the company asked the winning agencies to commit to a guaranteed increase in ad spending on Disney properties.
Facebook was set to send out its first letters to agencies last week seeking requests for information on the media pitch. Facebook has been with WPP’s Mindshare and Dentsu for its media buying needs since 2014, and this is its first major overhaul of how it spends its ad dollars.
Media reviews include a thorough audit of how a marketer has been spending their media dollars, how much it spends and how successful it has been. In this case, Facebook is working with ID Comms, a consulting behemoth that has worked with T-Mobile, Hershey’s, Mars and others.
The requests for information go to about six of the major holding companies to see if any have conflicts of interest that would preclude them from taking Facebook’s account. For instance, Publicis already runs media buying for TikTok, the Chinese-owned app that has emerged as a major Facebook rival; Essence handles digital media for Google.
Facebook has good reason to use the review process to at least try to repair relationships with the agency world. Last year, agencies and some of their biggest clients were among more than 1,000 advertisers concerned about disinformation and hate speech on Facebook that resulted in an ad boycott of the social network.
Media reviews speak directly to a company’s marketing future and its growth strategy. Facebook has a sprawling family of brands that cover the social network, Instagram, Messenger, WhatsApp and devices such as Oculus VR and Portal. The media review can be a catalyst to bring all those sides of the business together, getting teams across the organization pooling their spending power to get the best deals and rates when buying ad space.
“A review can create new behaviors; it creates a new horizontal in a large corporation,” says the executive who is familiar with Facebook’s review. “Giant companies are organized in verticals. A pitch bonds teams horizontally.”
It’s unclear how Facebook will structure its new media strategy. In the past, it had two agencies running media. But there is power in combing all that spending under one agency.
There will be some conflicts that are unavoidable in Facebook’s media review, including agencies having to prove their chops in knowing the ins and outs of buying media on Facebook and its other properties.
Facebook already knows which agencies are the most adept and efficient at spending media dollars, and which are fastest to adopt new media opportunities on its properties.
“Facebook sees what every agency does on its platform,” says another agency executive, also speaking on condition of anonymity, because Facebook was previously a client.
Worth the bet?
While billions of dollars could be at stake, some agencies might not be eager to take on Facebook at this moment.
Facebook is guaranteed to be involved in fights in Washington over pending privacy and data legislation and antitrust activity; some agencies already have or are seeking contracts with governments and governmental entities.
There also is a sense that Facebook could be a poison chalice, souring other brands in an agency’s portfolio. Brands that have been wary of Facebook could worry that the winning agency, or agencies, will favor the new client and spend less time and attention furthering their interests.
At the same time, any winning partner could expect favorable treatment from Facebook with first dibs on new technology, products and insights.
“If you’re Facebook’s agency, you may get access to special innovations before other holding groups too,” Paull says. “That’s the upside to being Facebook’s partner.”