Media Week

Is the media model broken? It was one of the big issues discussed on the conference floor and in the bars at Media Week's recent Media 360 conference in South Wales.

The process goes something like this. Client calls pitch to ensure it is getting maximum value for its shrinking marketing budget. Eager media agencies pitch for the business. Agency drops its trousers on fees to win or retain client. Agency absorbs business. Agency realises it isn't going to make any money on the account if it doesn't sharpen its pencil in its negotiations with media owners. Agency puts squeeze on media owners, especially those they regard as weak in the market. Chaos ensues.

This process may go some way to explaining why Aegis clients were pulled from Five in the first quarter of this year. Or why BT recently pulled its advertising from the same broadcaster's schedule. Starcom and Zed Media retained BT in January after a bitter and bloody pitch shoot-out with Mediaedge:cia, but it paid a heavy price in terms of guarantees about savings on media prices.

The case for a move from a fee or time-based structure to a value-based proposition was well made by Steve King, worldwide chief executive of Zed Media's parent ZenithOptimedia, in his presentation at Media 360. He was adamant that buying cheaper did not represent differentiation. But does this tally with the way the BT pitch panned out?

Agencies say they wish they weren't always judged purely on price and that the contribution they make to their clients' overall business and strategy deserves more recognition and remuneration. But clients and media owners note that agencies always lead on price in their pitches, so why are they surprised when they are ultimately judged on these criteria?

Some feel it leads to darker practices alluded to by Universal McCann London chief executive Andy Jones in Media Week TV's Media 360 round-up show: a lack of transparency, rebates, back­handers and phantom invoices, which Jones says makes it impossible for agencies to offer genuinely neutral advice and stops media being taken seriously as a professional services industry.

Who's going to break the cycle and be brave enough to say "no, we can't operate on those terms of business" and actually turn down an account because the price isn't right? Is there a solution to this conundrum?

Media Week's annual Media 360 conference took place last week at the Celtic Manor Resort in South Wales, with 250 top-level delegates congregating to discuss the big media and advertising issues of the day. Media 360 is all about the holy triumvirate of client/advertiser, agency and media owner: how those three elements operate and how they interact with each other to their mutual advantage.

It is also about the blurring of lines between the three elements of the advertising mix and how each has to change the way it works in the modern media environment.

Keynote speaker Jonathan Mildenhall, vice-president of global advertising and creative excellence at Coca-Cola, introduced the concept of trans-media storytelling. It is best illustrated by Coca-Cola's evolution of branded entertainment to the invention of a virtual world represented by the Happiness Factory. Happiness Factory became the highest-rated ad in Coke's history, gives consumers multiple entry points to the virtual world and provides revenue streams that can be exploited through the likes of comics, books and films.

Mildenhall dubbed it the world's most fertile and lucrative advertising platform, but noted that this requires agencies to think in a very different way. Coca-Cola's creator of its Happiness Factory fictional world, Starlight Runner, invents characters and thinks 10 years ahead, whereas media and ad agencies typically confine themselves to an 18-month vision.

Laurence Green of Fallon, the agency responsible for the excellent Sony Bravia and Skoda campaigns, joined media agency Starcom's Howard Watson and Cadbury Dairy Milk brand manager Lucy Evans to explain the iconic Gorilla campaign. Cadbury also thinks like a content producer, through its Glass and a Half Full Productions banner.

Green bemoaned the vested interests of traditional media owners that he says produce blinkered thinking and sniping. Brands have to utilise free media - or new media - but should also exploit the unique advantages of traditional channels, such as the 7.5 million-viewer end-of-series Big Brother TV slot that Starcom booked to launch the Gorilla campaign. There was much food for thought that will be explored further in next week's Media Week, and in a Media Week TV highlights show.

It seems hard to believe that the time to get cracking on Media Week Awards entries is upon us again, but just as winter has turned into summer without seeming to bother with spring this year (at the time of writing at least), the call for 2008 entries has already gone out.

Thomson Intermedia is changing, and it is changing in a way that could have repercussions for all media agencies.