I was surprised about the article that appeared earlier this month in the New York Post, “Ad Firms Face Problems on Guarantees,” that discussed the practice of media agencies being pushed by clients in new business pitches to guarantee future pricing in media. We’ve seen a number of these high profile pitches in the past year.

I was told by a media agency head that this was common practice in Europe and was now filtering its way into the US.

This is a deplorable practice for two reasons:

• Every agency buyer knows that if a client demands lower costs, it’s all about lowering the quality. And this can be done by stealth … a practice that ends up hurting marketers just to please procurement. In the end the client’s business suffers.
• In the US, no media buying agency can guarantee any price. Agency deals don’t apply here as I understand they do in Europe. Client contracts and rates are negotiated based on their volume and commitment on an individual or legacy basis. If an agency or client can tell me exactly what the market is going to look like next year and read my mind as to what we are going to negotiate, then they really must be geniuses.

I found it illuminating that the New York Post article did not include any comments from the media sellers’ perspective.

How do media organizations view media rate guarantees made by agencies? In the media marketplace advertiser, agency and each media property must collectively agree to terms. Are media service agencies that guarantee media rates fairly and transparently representing all of the essential constituents in the media market place?

Concerned Media Executive