New Frenemies: Collaboration Trumps Competition

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“The gun is loaded and it’s on the table.”

I had just asked the CEO of one of the world’s largest digital media companies about the trend of publishers masquerading as ad agencies, and the tensions it creates between people who do what he does for a living and people who do what I do for a living.

His point (with which I agree): this is not an issue we can ignore.

From the perspective of agencies, media companies were long viewed as vendors. Then they were partners. Now they’re also rivals.

Let’s discuss.

As media companies launch and expand brand studios—units dedicated to developing custom content for advertisers—they are increasingly encroaching on roles traditionally played by agencies.

Their motivation seems to be less about the needs of their brand partners and more about a search for new revenue streams as their legacy ad models buckle. As one head of a media company’s brand studio told The Wall Street Journal: “Advertisers don’t need publishers’ audiences the way they used to; they can get that anywhere.”

Fair enough. These companies have every right to diversify their business models. And there’s no need for agencies to be defensive about that, even if it could cause for some tense meetings as ad shops and media companies collaborate one day and compete the next.

The key for agencies is to ensure their role is clearly defined and the unique benefits they provide to clients confidently articulated.

It all comes down to business models.

As I’ve said before, media organizations are designed to understand their own audiences and assets—not those of brands. Other than sales, all resources are devoted to building affinity for the media brand. That’s not a knock; it’s how it should be. It’s how those brands create value.

Agencies, on the other hand, are tasked with finding the intersection between brand truth and culture, and with protecting the brand’s voice. Agencies assemble talent and build expertise that understands the nuance of brand strategy and how creative solutions can drive positive outcomes.

Which is why collaboration trumps competition when it comes to what’s best for brands.

The creation of brand studios is actually a good thing for agencies. It puts content experts on both sides of the table who speak the same language, similar to the dynamic between media sellers and buyers. It elevates the importance of custom content and paves the way for relationships to move beyond transactional.

The push by some publishers to play the role of both media partner and agency complicates that scenario. While brand studios are eager to have direct access to clients—and to tap new revenue streams—they’re worried at the same time how it will impact their relationships with agencies.

For agencies, neither a defensive crouch nor a punitive stance are appropriate responses. Instead, agencies have to be sure the value they add is clear and, uh, valued.

Agencies help brands uncover the stories that are worthy of people’s time, and help them craft and share those stories. Agencies build content ecosystems to work across multiple partners. They have a deep understanding of brands’ business objectives and insights into human behavior. They gather audiences around brands rather than channels.

Long-term, many publishers may find they don’t want to be in the agency business. They’re simply not built to engage with brands at a high-touch level on a continuous basis, which is the primary purpose of agencies.

“Frenemies” are nothing new. The word itself dates back to the 1950s, and it came into broad use in the ad business a decade ago, often in reference to Google. In this kiss-and-punch reality, as long as each partner delivers value, each will have a role.

No one needs another distraction from the focus on operating in clients’ best interests. If agencies and media companies trade blows over who’s the better content partner, they’ll both wind up weakened. If they come together to create better solutions, they’ll deliver a more powerful punch.

With apologies to Chekhov, the gun may be loaded and on the table, but it doesn’t have to go off.

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