Is future little or large for media?

Media agencies and their clients are unclear over whether large or small agencies are the way forward. Liz Stuart looks at the pros and cons of each

In the same week that Marketing Week revealed Zenith Media’s managing director, Andy Tilley, was setting up his own media consultancy with BMP Optimum joint managing director, Derek Morris, came the news that Zenith had also lost 20m BSkyB business to an agency less than half its size and nowhere near its reputation, Universal McCann.

However, these two events generally go against the emerging trend in the media agency world towards larger companies.

Networks such as WPP Group and Omnicom are busy merging agency media operations and medium-sized media independents such as Manning Gottlieb Media are being actively targeted for takeover in the rush towards greater volume.

However, there appears to be limited enthusiasm on the part of big spending clients to tag along. This is surprising, as the attraction for the big advertisers is clear. As TMD Carat new business director Laurence Janes points out: “It is all about resources. Clients go to someone big because they need somebody to leverage deals with the large media owners. They also get access to media research to develop planning tools. All that does not come cheap.”

He says that across Europe, Carat spends 12m on research and planning tools, such as Seekers. He adds that large agencies also have the resources to attract the right people.

Zenith press buying director Damian Blackden says that larger agencies can develop specialist teams dedicated to different media. Press buying is light years away from TV buying.

But John Carter managing partner of Media Solutions says that media giants are obsolete. He says: “I am not surprised that Sky has reviewed out of Zenith- it is a dinosaur in the market. Sky being a media owner, it knows better than anyone else how much the whole world of media has changed.”

He argues that shops like Zenith were set up in the mid-Eighties to keep advertisers’ costs to a minimum. It is debatable whether they have achieved this- as Channel 5 chief executive David Elstein observed at the TV conference in Monte Carlo: Since 1987, ITV and Channel 4 have increased adult commercial impact by less than three per cent and their own revenues by 63 per cent, he said.

Carter disputes the value of research carried out by the larger agencies. “All the information they produce in research is in the public domain anyway.

“And their planning tools all start from the wrong end – they start from the perspective of media and not of people.”

At the other end of the scale are the small outfits – such as Tilley’s – offering an almost bespoke service. Morris claims that it is harder for the bigger shops to get out of the mass buying process and have “top-level thinking.”

Small shops have the advantage that they can concentrate all their efforts on one client, particularly if they are working on projects.

One role for them in the future would be to act as an intermediary between the client and the giant media conglomerates – especially if the media conglomerates start to align themselves with one or two media owners.

One media buyer says: “Buyers will have a check list which they will go down, but the final question will always be price.” Smaller shops, obviously, tend to fall down on this point.

The big five networks can lean on sales departments to get cheaper rates or free ads but as one source says, there are fewer and fewer discounts. “It used to be that Zenith would get a better deal because it had so much clout. But now there are five networks billing more than 500m a year and they are all demanding the same prices,” the source says.

Medium-sized agencies, anxious to win new business and raise their profile will chase the big five to offer good deals. However, if they take on too much business and overstretch resources it is questionable whether the service will be up to scratch. It is believed that since winning the 12m Esso business from JWT last month, staff at Universal have been working late most nights and even weekends.

It seems to be a well-accepted maxim that you get what you pay for when it comes to media buying. Carat’s James says that if the client wants to block-book some TV then the agency can take just half a per cent and still make a profit. But if they want to use a variety of media then we would be pushed on five per cent.

Nick Shepherd, general manager, coffee and food at Kraft Jacob Suchard, has the ultimate responsibility for a media buying budget in excess of 20m, currently with Zenith. He is also known to be talking to various agencies- although he insists these are ongoing talks and do not constitute a review.

He says that clients are beginning to pay attention to the importance of media and are being more demanding because of this. “This is opening up an opportunity for smaller agencies. But it is a window that will soon be closed as larger agencies will either move to improve their service or will buy up the small operators.

“But when you have the diversity of brands I do and you need such a mix of media, I think I would be best served by a large agency.”

For this reason and the fact that greater economies of scale can be achieved by the merging networks, the Sky decision may go against the trend. But not for very long.

If sources at Interpublic group, which owns McCann-Erickson, are to be believed, a possible merger of Universal McCann and sister media agency Western Media International is still a real prospect.


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