The ad industry is under threat from clients who are squeezing them, devaluing their services.
The latest casualties of this trend could be the management consulting firms that oversee agency reviews for big advertisers.
These firms sometimes sell data to clients to let them compare the different agencies’ rates, and the practice could further devalue advertising services.
According to one source, a major pharmaceutical company went to the extreme of insisting that consultants provide that information. A second source called that practice “corporate larceny.”
Ultimately, the practice can push prices down — and it may be illegal.
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Advertising agencies and holding companies face an existential threat from clients devaluing their services.
The latest casualties of this trend could be the management consulting firms that oversee agency reviews for big advertisers. Sources say there’s been a rise in fee benchmarking, whereby the consultancies provide clients with detailed information on agencies’ hourly rates, commission structures, full-time-employee costs, and more.
This information is taken from the agencies’ contracts with their own clients and resold to other advertisers, who can then use it to gauge market rates for such services. But it can also help the clients shop by price, and agencies fear this …read more
Source:: Businessinsider – Technology