The fact that not one of its GroupM associates will take part either even more so. Let’s not forget this is one of the agency’s biggest global clients, and the decision comes at a time when WPP - post-Enfatico and burdened by TNS-related debt - is under close scrutiny. Only recently Standard & Poor’s downgraded the holding company’s debt from ‘stable’ to ‘negative’.
WPP is not normally in the business of ditching marquee global accounts, so the decision is worth scrutinising. A senior source revealed that the client was simply offering too little to make holding the account worthwhile. MediaCom would be “running a real loss” on the business. Nokia, of course, has declined to comment.
This is not an isolated tale. We’ve heard of several Asian media pitches that are little more than cost-saving exercises. In a few, the incumbent has, after much toing and froing, decided to draw a line and name a price below which it will not go. The pitch goes on without them. Depending on how you want to spin it, it is either a noble defence of an agency’s right to be paid, or a sign that, at the moment, some agencies simply cannot afford to sacrifice margins.
The trend underlines the very real issues media agencies are facing. Media owners are not generally having it easy either, but there has been some grumbling that ad rates are not falling in line with the market. Indeed, there have been instances, as with freesheet The Sun in Malaysia, where ad rates have risen.
So on the one hand you have clients trimming budgets and looking to do the same for less, and on the other media owners unwilling to give it to them. In the middle are an increasingly squeezed bunch of media agencies.
What happens next should be interesting. Will Nokia find an agency willing to take on its account? Almost certainly. There are still agencies out there competing very aggressively for share on cost. An email from within Mindshare obtained by Media in February reveals just how fierce competition between the big media networks is, with talk of “the need to get very aggressive with key competitors like OMD and Zenith and attack their local clients”. More recently, there have been complaints that some agencies are consistently undercutting their rivals - a state of affairs that may mean a short-term business lift (and the chance to put off making deep staff retrenchments) but ultimately does nobody any favours.
And what does all this mean for agencies’ attempts to sell themselves as business partners - an added-value rather than a lowest-cost approach? When push comes to shove, is it all really still about how cheaply you can buy media? It seems this downturn may provide an answer.
Got a view?
Email david.tiltman@media.asia
