Media buying agencies intend to cash in on the digital advertising boom as clients look at cost-efficiency, measurability and usage of new media, including social networking sites.
"One thing is sure… the increasing emphasis placed on the medium by clients means online media are having a good year," said Shyamsundar Ramlal, Regional Digital Champion, Mindshare.
Dimitri Metaxas, Group Director, OMD Digital, said: "We are seeing growth during this period as dropping sales and shrinking market share force companies to look at new options to advertise more accountably and cost effectively. We always said a recession would be just what our industry needed for a real kick-start."
And if social networks were to become the futuristic hotspot for advertising, where rates are cheaper and ads can be designed and uploaded individually, would clients then go through media buying agencies?
This assumption is supported by some advertisers especially within social media networks, who regard profit margins of media buying units as overrated.
According to a local contractual publisher, media buying agencies generate around 50 per cent profit from retainer fees, commissions and package discounts off the media rate-cards.
This means media buying agencies make 15 per cent profit as standard agency commission from the owner of the advertising space, and additional 10 to 15 per cent as a series discount, five per cent for prompt payment discount, in addition to another 10 per cent discount bagged by the bigger agencies.
And in cases where media buying agencies give discounts to clients it is usually between eight and 10 per cent, leaving the rest as net income for the agency. On the other hand, with social networking sites such as Facebook, an advertiser does not need to go through a media buying agency. According to the Facebook guidelines on ad placements, an advertiser can specify a budget as low as $10 (Dh36.7) per day.
Thus for a $300 a month, an advertiser can determine a very specific target audience by age, gender, location and preferences among others, choose to pay per click (CPC) or cost per thousand impressions (CPM) and never exceed the budget specified.
Other websites – mainly online news sites – advertising takes place through agencies as well as individuals. Of course, media buying agencies are given preferential rates, yet, few advertisers choose to go on their own, said a marketing manager of a regional website.
From an agency point of view, Metaxas estimated overlays or ads that appear over the web content to start generally as low as $20 CPM to anywhere above $70 CPM (although there are CPMs much higher). Online banner prices range from as low as $1 CPM up to around $40 CPM and there are CPMs much higher as well, he added.
On adverts on networking sites, Ramlal said: "Media buying agencies are not just mediators. Media buying agencies are investment planning consultants. They advise clients on the best return on their marketing investments. And media agencies, like us, take great pride in bringing to the table knowledge, experience, insights and strategic planning capabilities that are the best anywhere – and you will not get that from a mere web-based interface that allows you to book space.
"Not all clients are comfortable handling the intricacies of social media brand behaviour– so even when a brand establishes a presence in the space and wants to connect with its consumers, we manage it for the client."
A marketing executive at Zulekha Hospital, which is currently running ads on Facebook, said they like to post their ads on their own.
Increasingly still, media buying consultants agree the role of their units will additionally intensify focus on research and planning.
Ronald Howes, Managing Director of Memac Ogilvy said:?"The role of media buying will evolve to include more platforms and more varied formats. Media agencies already offer research and planning as part of their folio, all that's going to happen is that their services will grow to match the growth of the medium itself."
Douglas Palau, Managing Director of Proximity Impact, said: "Media agencies would have never existed or survived if they were simply purchase agents.The opportunity to buy direct from media has always existed but represents a small part of the general industry turnover."
He added: "An increasingly digital-centric media environment challenges new media planners because now everything is more immediate,more measurable with real-time feedback and the ability to optimise constantly. This means the client is also in a better position to appreciate the quality of our media work and the resulting business benefits."
On the evolving nature of media buying agencies, Ramlal said:?"Online media owners rely on us as much as clients do to make sure they are presented the right way. The terms of business cannot and have not departed from long-established norms such as ad packages and discounts."
This also could apply to social networking media, according to Ramlal. When a social media platform owner creates advertising inventory, he wants to market it. "Then the media agency steps in," said Ramlal.
However, Metaxas noted that digital media operate on a slightly separate business model requiring specialist skill sets, budgets, and resource allocation resulting in separate contractual agreement. Due to the nature of managing digital media, the technology, the resources required throughout the campaign project and the overheads incurred are very different.
"This model does not apply to social media because it involves more than media buying. There are elements of set-up, production, administration, and analysis so we prefer to consider a mixed fee, including time spent along with supporting media bought. The supporting media would be on a commission basis," he said.
Metaxas added: "Globally digital media [mainly internet] is cutting into print media revenues for many years now. This may give an indication that it has been better at generating the desired response for brands though it is worth stating that digital and print media may play very different roles in the media mix."
According to Ramlal, digital media scores in areas where interaction between the brand and the consumers is required, such as in promotion competition, coupons and vouchers.
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