What is, 'Ad Agencies Putting Themselves in their Client's Place'?

"What is, 'Ad Agencies Putting Themselves in their Client's Place'?"
(by Hideaki Koizumi)

We often hear people in the marketing industry in Japan using the term, 'selling media'. On the contrary, in the US, the term, 'buying media' is often used. How did this difference arise? It comes from the historical differences in the development of advertising agencies in Japan and the US.

People believe that 'Volney B. Palmer', which was founded in 1841, was the first modern advertising agency in the US. As you may know, it was a sales agent which sold ad space in newspapers in the beginning. Later, a company lead by 'George Rowell' started working as a broker. To compare this company with Palmer's, it drew a line between being a sales agent and an ad agency. But it still was not an 'ad agency which put itself in the client's place'. 'NW Ayer & Son' is the ad agency that started the transparency system for contracts and handling charges from 1876, ten years after the Civil War had ended. NW Ayer made clear the costs from the media companies and proposed the idea of a flat 15% commission which was later standardized. Of course, these moves caused trouble for some in the industry and the company was criticized. And at around this time, ad agencies in the US began to split into one of two streams; either as a 'media representative' which sold ad media space and 'put themselves in the media company's place', or as that of an 'ad agency', such as NW Ayer.

In Japan, having an ad agency in charge of ad space in newspapers started in 1880. There is still not many so-called 'media representative' companies in Japan, but there are still many ad agencies that have equity relationships with media companies. This is why many ad agencies have names along the same family lines of newspaper companies. Currently, many ad agencies have close relationships with both the media and advertisers.

Then, the question is, are all the ad agencies in the US businesses that 'put themselves in their client's place'? Well, the fact is that not all of the agencies do so. Therefore, in the US, many consulting and auditing companies exist. But in Japan, these types of companies are few. Of course, there are business cultural differences between Japan and the US. So, I'm not so sure that the Japanese business culture can accept something like the auditing of ad agencies. But there is a possibility that more such companies could begin operations in Japan, as there has been more focus recently on accountability of ad investments.

Many advertisers probably wonder if they can completely trust their hard-working ad agencies. Of course, there are some instances of ad agencies 'putting themselves in their client's place', where they do not prioritize their own profit or that of the media companies, but work for their client's success. The most important thing is total transparency for all. Advertisers should have the same attitude. In other words, they should share their data with ad agencies as much as possible. In short, establish a relationship of mutual trust. We should try to create an atmosphere where ad agencies can not keep secrets from advertisers. It is difficult to know if something is true or not from what the ad agencies say. Therefore, advertisers in USA and Europe ask ad agencies to submit periodical reports, or ask an auditing company to check the ad agency's service, etc. The purpose is not to 'picking holes' in the agencies' service, but to be able to work together in a reliable environment. And to do so, advertisers need to take such measures.

When advertisers work with 'ad agencies that put themselves in the client's place', we do not recommend the advertiser work with many agencies. In USA and Europe, generally speaking, advertisers work with only a couple of agencies. But in Japan, some advertisers do business with many ad agencies, sometimes even over a hundred agencies! On the other side, people working at ad agencies sometimes have to deal with over 10 advertisers at once. Under these circumstances, it is very difficult to develop a good working relationship where both can focus on the brand and talk about everything with each other. So, I also hope more advertisers start working almost exclusively with 'agencies who put themselves in their client's place' so that their issues can be solved together.

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