If China is where the future happens, that’s bad news for media agencies. In China, big brands are increasingly moving their advertising budgets from agency trading desks to Baidu, Alibaba and Tencent (known as the BAT) for more media transparency. It may make sense from a cost-saving perspective: If brands can strike deals with the BAT at a good price on their own, why bother to pay a middleman to buy media? Also, brands now have more campaign management service options like vendors and consulting firms, aside from their media shops.
China’s business environment is tough for media shops. For instance, last month, WPP blamed the “bumpy growth” in Brazil, Russia and China and weak ad spending from consumer packaged goods companies for its disappointing quarterly financial results. And WPP chief Martin Sorrell said in an interview with Reuters that the holding group’s revenues in China were flat in the first six months of last year.
Read the full Digiday article here.