Claire Beale On Advertising: Cut price and low quality is a risky strategy

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.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Ojo Onaolapo celebrates winning the bronze medal
commonwealth games
Arts and Entertainment
Rock band Led Zeppelin in the early 1970s
musicLed Zeppelin to release alternative Stairway To Heaven after 43 years
News
i100
News
Prince Harry is clearing enjoying the Commonwealth Games judging by this photo
people(a real one this time)
Extras
indybest
News
Richard Norris in GQ
mediaGQ features photo shoot with man who underwent full face transplant
Sport
Lionel Messi looks on at the end of the final
football
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
News
Your picture is everything in the shallow world of online dating
i100
News
The Swiss Re tower or 'Gherkin' was at one time the UK’s most expensive office when German bank IVG and private equity firm Evans Randall bought it
news
Life and Style
Attractive women on the Internet: not a myth
techOkCupid boasts about Facebook-style experiments on users
Sport
Van Gaal said that his challenge in taking over Bobby Robson's Barcelona team in 1993 has been easier than the task of resurrecting the current United side
football
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Media

Account Manager, Spanish, London Bridge

£30,000 + 20K Commssion: Charter Selection: This rapidly expanding organisatio...

Account Manager, Spanish, London Bridge

£30,000 + 20K Commssion: Charter Selection: This rapidly expanding organisatio...

Account Manager, London Bridge

£30,000 + 20K Commssion: Charter Selection: This rapidly expanding organisatio...

Content Manager - Central London

£35000 - £40000 per annum + Benefits: Ashdown Group: Content Manager - Central...

Day In a Page

The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
Countries that don’t survey their tigers risk losing them altogether

Countries that don’t survey their tigers risk losing them

Jonathon Porritt sounds the alarm
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz
A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on