Myths vs Realities

We lost a client recently because believing a myth was easier for them than first-hand evidence of reality. The myth is that larger media buying agencies secure better pricing on their TV buys than a smaller, independent media shop. Never mind the evidence we had for a year of beating one of those larger shops by 25%. In the scatter market, vs the prior agency’s upfront buy. Three quarters in a row. With less than two weeks before the first air date. While improving the network selection and daypart mix. Never mind the reality and the results we achieved.

But the myth is believable. Why? If you buy paper in volume do you automatically get the best price? No. However, if you buy from one, or a few suppliers, you can get a better price. But does that translate to buying TV? Actually, yes it does. And that’s why our buys and our pricing were better. A large media agency has to buy every vendor to meet the diverse needs of their clients. They cannot say no. If you cannot walk away from a vendor you have no negotiating leverage. The smaller media shops, doing more targeted buys, have significantly more leverage even though the volume of their spending is lower than the volume of the big shops.

 There’s also a strategy and process issue at play. From a strategy standpoint, we can identify a handful of networks (or magazines or publishers to buy direct) that really make sense for an individual brand’s needs through better planning. Our process is to only negotiate with those that meet our strategy. The larger shops, because they are focusing on demographics alone, RFP too many vendors and spend most of their time sorting through vendors that they are not buying.  That leaves less time to actually negotiate with vendors they do buy. Being a TV buyer in one of these large media agencies is like Lucy and Ethel working the production line in the candy factory. They can’t properly wrap each candy because the next one and the next one is right behind.

So now this former client is at one of the big shops with a $12MM to $15MM media budget. The media agency they hired just landed another client 50X larger. I hope it works out for them because they’ll have to pay us more to take them back.

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