Adam Ferrier says the traditional media agency business model is well out of step with what their claims are for their client business interests – cozy relationships with media owners, he argues, has put a skew on the media plan.

Thinkerbell's co-founder took stage at the IMAA’s ‘IndiePendence Day’ conference on Wednesday to make the bullish call for the industry to change the status quo. He reckons indie agencies, sans the shackles of legacy and scale confronting the global networks, are well placed to make a shift.

It’s the message du jour from the indie sector and Ferrier brings it all back to the idea of '"bounded rationality" – i.e. the idea that rational decisions are limited to the information or perspective held by the individual. It's possibly why, even in Ferrier's media business, media buyers are often slated with bias to their own media consumption worldview. 

“If we take buying effective media as our objective, you've got the bounded rationality of the client who’s trying to make a media decision, you've got the bounded rationality of a media agency who's trying to make recommendations and then you've got the poor old media person within the media agency trying to make sense of all this shit."

That tension, per Ferrier, puts pressure on the agency “to justify the absurd and the made up – to make it not seem absurd and made up”. Thus, what should be a relatively simple task of making media recommendation becomes “incredibly complex”.

Mismatched interests

The crux of the issue for Ferrier is “misalignment of financial objectives” and that “how clients make money does not match how the media agency makes money [and] how the media agency makes money does not match how consumers make decisions”.

He suggests media agencies are looking to play a risk-reward game without actually having any “skin in the game” – they’re not tied in renumeration to client outcomes.

“They've got [their client’s] money, and they sit on it like banks and that's part of their business. That's part of how they make money,” he told conference delegates. 

But even if that were not the case, decision-making is still broadly influenced by media owners, putting media plans at odds with the mechanics of consumer decision-making.

Ferrier argues that the effectiveness of PR, word of mouth, loyalty programs and reviews are often overlooked in favour of the mass media honey pot. Some of those, of course, are part of his business. Thinkerbell likes stunts and experiential events which scale through a well-oiled PR machine.  

“Media agencies make money by programmatic, connected TV, out of home, radio, bought social and a bit of financial trickery,” he said. “You can't have media neutrality if you don't have financial neutrality.”

Scrapping deals and freebies

Part of achieving financial neutrality, beside rewiring renumeration, is a broader governance issue. Getting that right will ensure media agencies have their client’s interests central to their operating agenda.

“The media owner has their best interest in heart, as they should. [They’re] constantly trying to tell us that what they're recommending is really good, and we're meant to be deciphering that and doing the best thing for the media agency and for the client – and those two things can have a bit of friction."

And then the clanger: “If the client gives you $100, how much of that is spent on paid media versus arbitrage?”

While broadly considered to be less prolific amongst indie agencies, the growing awareness of media agency "principal media deals" has some suggesting advertisers look more closely at how some indie agencies operate. "There's a lot more going on there than most think," said one media executive who did not want to be named.    

Ferrier said Thinkerbell's media unit doesn’t do it. Sam Buchanan, CEO of the independent media agency industry body, IMAA, would not comment. 

“Arbitrage is a function of a dying business model," Ferrier said in his address. "We need to work out how to create other revenue streams. The stronger your business model is, and the less you need to work out duplicitous revenue streams, the better.”

But the potential for corrupting the client-agency process isn’t just limited to deal-making. Ferrier says complimentary tickets and freebies should be watched closely too.

“I hate it when I see free ice cream from a media owner in the office. I think to myself: ‘gosh, that just makes it that one per cent harder for us to recommend an objective decision to our clients’. When you take that up to tickets to sporting events and so on, it just gets harder and harder to objectively do the right thing by our clients.”

Rather than take the perks for granted, he reckons agencies need to acknowledge they might make talent “feel more positively predisposed to the media owner”, then to take that forward transparently with clients, and let them share in the rewards – “give them some of the ice cream”.

The problem with all that is it's often the perks for the younger set that make agency roles less of a grind. 

But Ferrier argues if the financial neutrality and governance is right, the next course of action for media agencies is to invest hard into “working out how consumers make decisions” and then “working out the role of each media channel”.

“The thing is media agencies are making shit up. The media agencies that are just making shit up are in a dangerous place, but those that work through this stuff are kind of invaluable.”

And indie agencies, he reckons, have the ability to “shape-shift far quicker than the traditional agencies”. At least the cleaner ones.