Will Big Consumer Companies' Clout Trump That Of Big Media Agency's?


PepsiCo and InBev's Anheuser-Busch's agreement to purchase media together is perhaps the biggest wrinkle that could affect this, and future, TV upfront markets.

Media agencies regularly talk about clout when it comes to leveraging the best upfront TV deals. And then it's assumed that in the end all their individual clients get the best attention.

Media agencies have already been squeezed through the years when it comes to fees and other compensation from their clients. To many, the Pepsi/A-B deal appears to jump ahead to a marketplace where some big marketers might decide to do without their media agency of record arrangements -- or at least some parts of their media buying/planning chores.

Of course, for this to work, consumer marketers need extensive in-house media departments -- which PepsiCo and Anheuser-Busch already have. Together, the companies' annual measured media spend comes to around $1.2 billion in the U.S.



Major TV advertising sellers will swear the Pepsi/A-B deal is not only about cost savings -- that other factors are at work, too. Still, one Pepsi spokesman put it plainly: "It's a way to allow both companies to purchase media more effectively and efficiently and reinvest savings in our businesses."

Both A-B and PepsiCo are major clients of Omnicom Group. A-B and Pepsi use the agency group's creative shops; for media, Pepsi uses OMD, while A-B's media is in-house.

For some executives, Pepsi and A-B seem to be saying that, even though the likes of OMD, a big media agency, can gain big savings through its leverage, even more leverage is necessary.

Perhaps it has to do with the fractionalization of media where it's harder to achieve scale, especially for large omnipresent consumer marketers like Pepsi and A-B.

In large part this move is an extension of procurement officers' control of big consumer product companies. They have grabbed the reins for travel, computers, paper clip and now, media purchasing.

But if the ultimate end-game is that big corporate partnerships rule the day, will those groups have the same day-to-day media negotiation savvy? The research? Will they get the ultimate savings they are looking for?

4 comments about "Will Big Consumer Companies' Clout Trump That Of Big Media Agency's?".
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  1. Andrew Crowley from ggiyt, April 21, 2010 at 3:53 p.m.

    every tv sponser should be doing this to save money and pass that savings onto consumers. I hale Pepsi and AB for thinking with thier heads for once.

  2. Paula Lynn from Who Else Unlimited, April 21, 2010 at 4:01 p.m.

    Too big to fail? For whom ?

  3. Rob Frydlewicz from DentsuAegis, April 21, 2010 at 4:17 p.m.

    Pass their savings on to consumers? Thanks for giving me my biggest laugh of the day!

  4. Andrew Crowley from ggiyt, April 21, 2010 at 4:34 p.m.

    OK, Ok.. so they wont share profits. But dont you think they're really waisting money buy using media buyers? they can create thier own MBS within thier own company and save millions. give me a good reason why they should't do it all themselves.

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