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.

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