Cookeing the media-buying goose

July 9, 2010

Outrageous indeed. I couldn’t agree more with IPA director-general Hamish Pringle’s take on Thomas Cooke’s contribution to an increasingly acrimonious global media-buying debate.

The travel operator is reported to be demanding a £1m signing-on fee at the conclusion of its £30m media review – in addition to “a reduction in agency fees currently paid” and “a minimum 10% saving through consolidated media buying” stipulated in the original brief for the 3-year contract.

And yet, the Thomas Cooke affair is only the most egregious example (to date) of a ripple of client practices which are causing stupefaction in media agency circles. It’s the way the world is going.

The principal bugbears in the debate are Unilever and Reckitt Benckiser. It is no coincidence that they are, respectively, India’s number one and number two advertisers. India, land of the cut-price call centre and the $2,500 Tata car, is after all where most of the low-cost action is to be found these days.

By way of background, read (if you haven’t read it already) a column by Les Margulis, an American media veteran – 22 years at BBDO. Promisingly entitled ‘When to walk away from an energy-sucking client’, the content below the headline does not disappoint. It’s a withering diatribe aimed at Rahul Welde – VP of media at Unilever for Asia, Africa, Middle East and Turkey – in particular, and cheapskate clients in general.

What (apart from an arrogant manner) had Welde done to deserve this opprobrium? About a month previously in a keynote speech encompassing the future of advertising, he had had the temerity to suggest that “marketing is all about brilliant ideas”. And one of them, apparently, is screwing down agencies, creative as well as media, to zero costs – if necessary by posting the brief on the internet and doing a bit of on-the-cheap crowdsourcing. See also George Parker on “Vindaloo Rat” and Jim Edwards at bNet.

Reckitt has stoked this controversy to fever-pitch by going one step further. Allegedly, it plans to charge each of the participants in a pitch for its Indian media-buying business up to $10,000. The suggestion has so upset the Advertising Agencies Association of India that it is advising member agencies not to pitch.

This bit may be a storm in a tea-cup, as I am assured by those in a position to know that RB has not actually asked for money (or is that just wiser-after-the-event back-pedalling?). Even so, the proven terms could scarcely be considered lenient: the “winner” will have to rebate volume discounts paid by media owners as well as offer compensation for any drops in TV ratings.

Which brings me back to Thomas Cooke’s modest contribution to the “media, it’s just a commodity” debate. What puzzles me, given that media agencies are being awarded virtually zero compensation these days, and are expected to indemnify the client against loss, is this: how does anyone make any money? It’s certainly not on the overnight interest rate. And yet media agencies continue to queue up and be plucked.

As for Thomas Cooke’s proposal, my only surprise is that it didn’t come from Ryanair first. Now that really would be “rapacious”, to use one of Michael O’Leary’s favourite words.

Bellwether optimism – no double-dipper, but interest rate rise may be on the way

January 18, 2010

Good news on the economic front, as the Institute of Practitioners in Advertising unveils the latest quarterly results of its authoritative Bellwether survey.

True, marketing spend fell for the ninth quarter in succession, but the rate of decline is the slowest yet. Some sectors, such as digital and direct marketing, even showed weak signs of growth. Apparently, budgets have been set higher for this year than last, and marketers are more optimistic than they have been for five years. Which emboldened Rory Sutherland, IPA chairman and vice-chairman of Ogilvy Group UK, to forecast an end to the recession.

So trebles all round? Well, not necessarily. IPA director-general Hamish Pringle tells me there may be a sting in the tail of this dying recession.

No, not a double-dipper: it’s not that bad. But he has seen this sort of marcoms recovery pattern before (like me, he sports a few grey hairs), and almost invariably it is the prelude to an imminent uptick in interest rates. So expect a hike earlier than the end of this year (though not, I suspect, before the general election). Pringle cautions his prediction falls short of being scientific. It’s a bit like counting the number of recruitment advertising pages in the second calendar issue of Marketing Week and gauging the economic recovery accordingly (a good indicator, but not infallible). The magazine was, by the way, gratifyingly plump in that respect.

Admen take arms against a sea of troubles

December 16, 2009

This week the ever-vigilant defenders of Citadel Adland were called upon to repel a brace of assaults on its freedom – though one, it has to be said, issued from the barrel of a pop-gun rather than a howitzer.

First the pop-gun. This was a study published by the New Economics Foundation, a right-on but left-leaning institute founded about 25 years ago. Its beef is with the parasitical rich generally rather than the advertising industry in particular. Admen, however, are cited as destroyers of value because they fuel feelings of dissatisfaction, inadequacy and stress. NEF has even managed to put a value on that destruction. It is £11.50 for every £1 of value created. How did they arrive at this astronomical negative calculus? I do not know. But my suspicion of politically-motivated pseudo-scientific deduction was aroused when I discovered that, using the same methodology, every £1 spent on a hospital cleaner results in £10 of value to society. Why? I can only conjecture that NEF’s eager young researchers have been spending too much time poring over Karl Marx’s labour theory of value (fatally flawed in having no insight into the effects of automation or, indeed, the appreciation of antiques).

Whatever; I will let Hamish Pringle, director-general of the Institute of Practitioners in Advertising, have the last word on the matter. “The NEF methodology is obviously very clever and we’ve used it to calculate that for every £1 of value created by a think-tank executive, £12.50 is destroyed. This is almost the exact reverse of a real economy employee.”

So much for the pop-gun, now for the howitzer. This was the much more measured Buckingham Inquiry into the commercialisation of childhood – named after Professor David Buckingham, an avowed international expert on children’s consumption of ads, TV and the web.

Buckingham concluded that there is indeed a rising tide of commercialisation in the playground, contributing to increased pester power. But he was careful to temper this conclusion with an acknowledgement that increasing commercial immersion was a fact of life in our society. Rather than embrace Draconian regulation, legislators should strive to educate our children in avoiding the more obvious snares of commercial enticement. Buckingham also pointed out that advertisers “have made available a range of new products and services that might not otherwise have been provided.” Though how much these actually contribute to learning is more controversial.

What mattered here, however, was less the studied impartiality of Professor Buckingham’s tone than the emotionally-charged nature of his chosen subject matter: vulnerable young minds. It was cannon from the left and cannon from the right, as far as our nationals were concerned. “Teach five-year olds to beware of advertising, says government inquiry” trumpeted The Guardian; “Should advertising aimed at kids be banned?” blared The Telegraph. Well, No, in a word. It’s an impossible task to define, still more to implement.

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