Claire Beale On Advertising: Cut price and low quality is a risky strategy
Monday 27 July 2009
The trouble with dropping your trousers in the ad business is that you either end up screwing someone or being screwed. And there's a lot of screwing going on right now, particularly if you work in media, because some of the less confident media agencies are dropping their trousers, offering a cut-price service in order to win new business.
The agencies that specialise in media buying - booking the advertising spots and space - are big and beefy beasts, negotiating media for hundreds of clients and spending anything up to £1bn a year on ads. These companies, like Mediacom or Carat or ZenithOptimedia, make powerful opponents for the big media owners like ITV, Sky and the national press, who want to get the maximum revenue from the advertising inventory they have to sell. The biggest buying and selling balls in the business sit across the negotiating table from each other and wait to see who blinks first.
After the bloody negotiations, though, they all go off and play golf in Barbados together, rubbing along nicely as true frenemies. Generally, everyone's a winner… if they're big enough. It's the small guys who can get screwed.
Now the recession has raised the stakes a significant notch. Big advertisers are looking for ever cheaper space and ever cheaper fees from their agencies. As a result there has been a glut of international media reviews already this year. Unilever, one of the world's biggest advertisers, has just kicked off a review of its $3bn media account, following in the footsteps of advertisers like Nokia, Reckitt-Benckiser, Vodafone and Renault Nissan.
So far, this has been the year of the mega pitch. For many clients, cost-cutting is not just top of the agenda, it's the only item on the agenda. That has made it very tempting for desperate media agencies to drop their trousers on price to win big - and, these days, even not so big - media accounts, promising to buy media cheaper than their competitors and to do it for cheaper fees. But something's got to give in this model. If some clients are getting cheaper deals it could be at the expense of other (smaller? more naïve? more loyal?) clients, who'll be paying more. The agency screwed by the Big Juicy New Client screws its smaller clients. Or screws the smaller media owners desperate to take some money, even at cut-throat rates.
OK, there's a lot more intelligence and insight that goes into the media process than this crude picture suggests. And the best agencies look after all their clients, not just the big ones. But there's more than a little truth here about the way the industry works.
What's certain is that media is in danger of becoming a commodity, focused too much on price and too little on quality. Media agencies that worked hard to develop an up-stream strategic offering are finding, right now, that more clients are only really interested in a cheap service: back to the bad days of pile-it-high, buy-it-cheap.
Into this bleak picture comes the Central Office of Information (COI), which handles the Government's advertising. You may have read last week that the COI is now the country's biggest advertiser, with an ad budget of £211m. It has announced that it's looking for a single media agency to handle this whopping account, and it will be looking for significant cost-savings from the review. It would be good to think that the COI could lead the way in holding a media review that balanced necessary media efficiencies with paying a fair price for an intelligent media service, despite the outcry last week at the size of the Government's ad budget. We'll see.
Best in Show: Samsung (Grey)
Samsung doesn't have much of a reputation when it comes to creative advertising, so the new ad by Grey for Samsung's fast new phone, Jet, is coming from a low base. The surprise, then, is that it's crisply scripted, beautifully shot and really quite sexy. It's an ad of two halves.
The first is slow and boring. People wait. They wait for buses, for airplanes, for sausages to cook on the BBQ. The second half is all furious energy and impatience and involves lots of pretty young people tearing at each other's clothes and rolling around. And the voiceover by James McAvoy glues the two halves wonderfully.
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