Why Some OOH Media Agencies Folded Up in 2018-2019
It's always a matter of economics. Then again, it is a matter of simple math. Headcount to Billings/Revenue Analysis. Back in 2004 max headcount for our OOH unit was 3. And yet we were enjoying 7.5% commissions on OOH bookings for clients jointly serviced by UniversalMcCann and by then Poster Publicity (forerunner of Kinetic), and full 15% for accounts serviced only by UM. Fast forward to 2015. I was aghast at the headcount of some OOH agencies who were actually living on 2% commission and yet had a big headcount. Talk about double whammy! True enough, a few years later, these agencies imploded. I'm just being straightforward here. The only way to keep the unit going in that case would be to:
1) Get rebates or side deals with vendors padding up media costs.
2) Be partially sustained/subsidized by the earnings from the whole agency just to keep the OOH unit afloat.
Something which I know we would not do in our old agency as guardians and good stewards of clients' money.
The solution for today for media agencies : farm it out to a small team who will do it at fraction of the cost than maintaining employees. The agencies have done it to the Finance departments with external providers, why not with OOH?
-Want to know more about consultancy for OOH related matters? email me at info ( at ) ooh.ph or drop me a line by clicking here.
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