December 4, 2007

Media Agency Profitability May Drive Media Selection

Media Buying Today

What Leads Media Agencies to Recommend the Various Major Media?

Although we are primarily a consulting company, we undertook to place about $50 million for an advertiser over the past 18 months or so (mid-2006 through 2007). We planned, negotiated and scheduled time and space in virtually all media: national and local television and radio, magazines, newspapers, out-of-home and the internet. We bought every imaginable unit and just about every time schedule possible, from broadcasts upfront, calendar upfront, scatter, opportunistic and “the night before” and “day of”.

Since I had not been directly involved in media buying for quite a few years, having functioned as an executive, manager and company salesperson, I thought it would be interesting to comment on my experiences and perception of the various media from a front row seat. My perspective is that of the manager of a media buying operation, particularly viewing media from the point of view of whether we can make media buys that are effective and efficient for our clients and profitable for us.

Ease of Buying characterizes national media

There’s nothing like broadcast network television for spending a lot of advertising money fast. The networks are set up to accommodate media buyers in every possible way; in fact, my experience was that they do virtually all of the work involving in buying network time. For example, they’ll provide historical ratings tracks, project ratings forward to telecast dates and then guarantee their projections. What’s left for the buyers to do? Very little as far as I could tell. Plus the network sales people are friendly, responsive and exude positive energy. It’s a pleasure to meet with them and work with them. I found we could manage effective and efficient network buying very profitably.

National magazines come in a close second in efficiency for the ad buyer. The extra challenge represented by magazines arises in planning print schedules, selecting specific publications from the huge array of print vehicles available. Added the to complexity of the selection process and dealing with a large number of sales people, with quite a bit of duplication from the big publishers, is the importance of securing the best ad position in each magazine. Unlike television, which still offers something akin to an “involuntary” ad exposure at least to non-DVR users (the preponderance of all viewers today and in the near future), individual magazine ads are often ‘seen’ by a minority of the readers of a magazine. This is because magazine audience is measured by someone’s ‘exposure’ to the magazine issue, not to specific ads or even an average readership score for all ads in a book. The bottom line: when buying ‘expensive’ magazines such as People and Parade, it is still pretty easy to handle print buying profitably for the media agency.

Local media may be unprofitable for media agencies

Local television and radio, OOH and newspapers are a disaster in terms of media agency profitability and operational efficiency. The spot sales system is fundamentally dishonest because the same ad time is sold over and over in a series of serial ‘pre-emptions’ that drop earlier buyers for buyers offering to pay more as the telecast date nears. Out-of-Home is site-specific and requires a great deal of time to find locations and verify postings. Achieving significant reach with newspapers requires the use of large numbers of individual publications, each with its own approach to pricing, positioning, contracting and scheduling of ads.

The Internet offers media agencies a special income opportunity because advertisers seem to be willing to pay internet-focused agencies on a completely different basis from media agencies. Moving advertisers into more and more internet-based advertising is therefore a highly profitable strategy for ad media holding companies.

Media agency profitability may drive media selection

The bottom line of my 18 months back in the media buying saddle: the networks and magazines should do just fine over the next few years because they make it very easy for media buyers to recommend them. The Internet should continue to outpace other media’s growth. And expensive to place local media need to find another way to get on media buyers’ screens; until then, their revenue will continue to be rerouted to easier to place media.


David Reich said...

Interesting that newspapers and radio, which are both hurting for ad revenues, make it difficult for buyers to purchase their pages or time. Someone whould wake them before it's too late.

Gene DeWitt said...

thanks for your comment. the folks at the tvb, an arm of the spot tv industry, are offering a little help in resolving electronic inconsistencies between the various tv station systems. but this looks to me like a bandaid on a hemorrhage. my guess is that the politicals and olympics next year will ease the pain for local stations but that 2009 will sock them hard. perhaps then they'll react.

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