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Shunu Sen

With the emergence of specialised media buying houses, clients can now evaluate agencies based on the quality of the planning function and choose a media agency for its buying power, thus getting the best of both worlds.

What will be the impact on advertising agencies and media houses with the advent of media-buying agencies such as MindShare? Do you see a beneficial impact or do you see the emergence of a monopoly situation? What has been the international experience?

- Valmand, MBA student, Loyola Institute of Business Administration, Chennai

THE fragmentation of the media and planning/creative functions of large advertising agencies has proved beneficial to both agencies and clients.

Prior to the setting-up of media-buying houses, agencies charged a standard 16.5 per cent commission on media-buying by clients which served as their payment for all planning and media services rendered. As agencies did not charge separately for planning, the function itself was not respected either internally or externally.

Even before specialised media-buying agencies were launched, companies with large advertising spends demanded creation of a separate outfit catering exclusively to their media-buying requirements, for instance, Adbur for Dabur, or Fulcrum which was set up by HTA for HLL.

As far as clients are concerned, they now receive better quality media and planning services. With the evolution of the media-buying function as a specialised function, it has become more focused and scientific. Media-buying agencies approach a client with a strategic process of first undertaking marketing analysis - where they start by gathering market information including target demographics and media performance within the selected market. This is followed by a process of strategic planning where the company goals are converted into tangible and measurable results, based on which a communication plan is developed using target objectives, audience reach and frequency, season trends, demographics, market trends and innovative tactics such as primary variables.

Increasingly, post-buying analysis is becoming a focus area where the buying house ensures that every advertisement runs on the correct dates, correct programme/page and adjacency to non-competitors. In addition, the costs and commercial rotation are also monitored. These post-buy steps allow the agency to guarantee that the maximum results are achieved by the advertising spends.

Apart from the quality of media planning and execution, clients are also benefited by the freedom to choose a different agency for the planning/creative function and a different agency for quality media services, based on their specific skill sets.

Moreover, as media-buying in India evolves further, we will see many more players in the market, including specialists such as MindShare, Maximise and Carat, as well as in-house agencies such as Adbur and Vaishnavi. Having said that, the competitive environment in media-buying is hotting up with advertising agencies professionalising their in-house media function.

Internationally also, the trend towards media consolidation has been increasing. The WPP Group has seven large media investment management companies including Maximise, Media Insight, and Mindshare with an impressive list of clients acquired both from the WPP group advertising agencies and independently. These companies have been extremely successful and proved beneficial both to the clients and to the agencies. In fact, the recent entry of Mindshare and Maximise in India illustrates their success through its expanding reach and network.

Global media-buying houses are consolidating both vertically and geographically to offer clients one-stop media solutions across the world. The recent merger of the Tempus Group with WPP, CIA, the media communications specialist of Tempus, and The Mediaedge, CIA's counterpart at WPP, is an example of this. Through the newly-formed company, CIA will have immense strength with combined global billings of more than $17 billion.

A recent study conducted by the International Advertising Association (IAA) on global media trends shows that although global media buying is still in its infancy (there is still not a wide range of global media buying opportunities available), some multinationals are already beginning to realise cost savings by centrally purchasing parts of their media programmes. As a result of the consolidation in the media industry, advertisers will increasingly be able to buy diversified media packages from a single conglomerate. This makes it more worthwhile for advertisers to work with global agencies and the media companies such agencies are often affiliated with.

In fact, even from the media company's point of view, the establishment of media-buying houses is not seen as monopolistic, as, contrary to popular belief, they do not negotiate on the collective buying power but on a client-to-client basis with the buying houses. However, the muscle power does give them added strengths while undertaking negotiations. Thus making it a win-win situation for all the three involved parties!

(The author is CEO, Quadra Advisory, a strategic marketing consultancy. Readers may send in their questions on marketing issues to The Editor, Business Line, 859, Anna Salai, Chennai - 600 002 or e-mail them to bleditor@thehindu.co.in)

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