Does Clout Exist?

by Jim Meskauskas, Dec 15, 2004, 12:00 AM

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Earlier this week it was announced that Nestle was going to consolidate all of their media planning and buying with Publicis Groupe's ZenithOptimedia. The account is worth over $500 million dollars in media spend. That's a hell of a lot of hot cocoa, instant coffee, chocolate bars, and frozen dinners (Nestle owns Stouffer's), not to mention fruit drinks and ice tea.

One of the reasons given for the combining all the media work under one roof was that by doing so, Nestle would benefit from "strengthened, more aligned strategic plans," according to a story in Monday's AdAge.

In the age of a renewed focus to brand stewardship and consistency of strategy across all brands belonging to a global uber-brand, this kind of move makes perfect sense. Each brand team working inside an agency will be able to, in theory, leverage on another's experience and understanding.

Different media groups will be able to look to one another for insight, and people working in different media on the same brand will have the opportunity to work together to create truly integrated communications packages, as well as execute genuine "surround sound" marketing initiatives.

But one of the other reasons given for the consolidation rang hollow. Putting all the media together in one place, Nestle will be better able to leverage their global media expenditures, which will yield greater efficiency for the company.

Now I've been around this business just long enough to have heard the "clout claim" more times than I can count. I've heard it used in pitches by agencies and by clients as reasons for media consolidation.

The question I have is this: do large media buying organizations really have clout any more?

When was the last time you heard network sales spokespersons say, "Well, this upfront was tough for us; the agency, due to their clout, got our rates down by 5 percent from last year."?

Large media buying organizations have been using their clout to pay double-digit CPM increases to networks for shrinking audiences for the last 10 years. Though trades are filled with musings and wide-eyed wonder about this phenomenon year in and year out, no one bothers to explain why. The best you'll get is something like, "well, because of our buying power, the CPM increases we paid this year were lower overall than last year."

What?

That's like saying this year was better because I only came down with spinal meningitis rather than last year's Ebola virus.

Let's face it; networks have big agencies and advertisers over a barrel due to a combination of 1) bad game theory (I have to buy it because someone else will if I don't, even if it isn't working for me) and 2) a fear that there are not alternatives. Though today I pay more for a program whose ratings make it a hit although 15 years ago it would have been cancelled, I do it because I'm afraid that there is no where else to go to reach an audience that size, even if that size isn't what it once was.

Enter the Internet.

With the growing presence of ad-skipping technologies in the home, the pervasiveness of broadband, and the increasing quality of content delivery over the Internet, advertisers are going to find that they can rely more on the medium to not only supplement, but in some cases replace broadcast for those demographic and psychographics they once had in television.

Is there clout? In terms of access to planning and research resources, yes there is. But in terms of efficiency yields from the costs of media, forget it.

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