Azhar Siddiqui, Managing Partner at Mediaplus Middle East, assesses how the model of bid-based media buying is shaping the media agency landscape, focusing on the rapid changes in the media business.
I started my career in media planning in 1998 with OMD which, back then, was still called the media department of BBDO. In those days, media planning was mainly centred around satellite TV. We media planners were obsessed with how to distribute budgets between the top TV channels. Agencies were chosen based on how cost-effectively they could buy the maximum spots or GRPs across the top 10 TV stations. Hence the term media-buying agency came into existence.
This is where large agency volume made a difference. Big agencies were able to negotiate discounts based on how much of the brand budgets they would be committing or spending on these channels. The higher the budget a media agency managed, the greater the discounts the media would give them. This would always spiral as bigger agencies would get the best discounts, which attracted more brands to them and increased their volumes, which increased their discounts and attracted more brands and so on and so on… This is why, for years, the same handful of media agencies dominated the landscape.
Fast forward 20+ years later, we have a very different scenario. More than 60% of brand budgets are now spent on bid-based media platforms like Facebook, Instagram, Google, Snapchat, TikTok etc. – there is no friend to call or clout to leverage and negotiate discounts irrespective of the volume or budget an agency is willing to spend. The algorithms automatically price the inventory (audience attention) based on supply and demand. Agencies have to work carefully on understanding these algorithms to be able to bid accurately and get the best rates for their brands. Bid higher and it results in wastage, bid lower and you end up not getting the media because you get outbid. Agencies are still buying media, but there is no negotiation happening. Agency volume, or clout as it was called, has become irrelevant – and so has the media buying model.
Enter the independents. The new bid-based media buying model has finally opened doors for independent media agencies who struggled to survive between the networks 10 years ago. Today, the bid on Meta is the same whether your budget is 100 USD or 1M USD. What makes a difference now is the tact of the agency. The ability to understand the plethora of data that platforms provide and navigate through it to 1. find your audience, 2. bid for that audience at an accurate price and 3. take that audience through the digital journey to achieve the brand’s end goals.
This isn’t to say the independents are better or worse at this, but the fact is that the DNA of independent media agencies is digital, because that’s the only media that’s given them a fair shot at playing the game. And that is something to think about.