Media Intelligence and the Upfront Brain Drain

Smart money. Something we all want to think we are. Who doesn’t want to be associated with smart money, or to be considered smart money? Media Buyers know the power of the term. It has to do with leveraging a slightly bigger stick or appearance of one to make a killing, to get a better deal, to outsmart the competition. Inherent in its meaning is the assumption that there is other money being thrown around with a lower IQ. Dumb Money, or more comparatively, wasted money.

No one likes to waste money, do they? The big media buying firms will tell you that they don’t waste a drop, that every dime of their clients’ cash is well spent. They have charts to prove it. So, who exactly is throwing around all the wasted money?

Of all the deals announced recently in the 2002-03 Network TV upfront, the OMD/Disney deal has gotten the most attention and the most mud thrown at it. Initially, once it was reported, my take was that its wisdom was based primarily on moving sleuth-like, under the radar, at the highest levels of both companies, reinforcing the power of big stick clout wielding its unabashed swagger in the marketplace.



My initial reaction was one of envy. I thought, “wow, nice move.” If one looks at the negative feedback coming from other media buying firm CEOs, their slamming of this landmark deal tries to mask a greater frustration and jealously that their firm hadn’t thought of it.

Smart money depends on the envy of others to reinforce that clever, separate feeling from the pack. It’s that “ha ha, we did it and you didn’t” attitude that makes a media planner need to love this business, if only to keep one’s sense of irony alive.

When a friend later commented about how that deal was the signal of the beginning of the end of OMD’s strategic chops, I didn’t know what he meant. He explained that since the deal, as reported, provides a new amount of flexibility within the 17 or so Disney media family channels for marketers, OMD was in essence relinquishing control of the media planning function to the networks.

While on the surface the OMD/Disney deal appears to be smart money, one must ask right now, ‘who feels the smartest?’ Is it the marketer whose cash was leveraged, the media buying firm or the media company?

After listening to my friend, I couldn’t help but feel that the House of Mickey Mouse had won this round. Mickey goes to the head of the class. For an under performing media company, they pulled one out of their hat. Or did they? And if they did, was it all that difficult? We also now hear that this year the major U.S. television networks found the frenzy for TV so brisk that two of the networks significantly raised their prices right in the midst of the bidding. More smart money? Sure, but for whom? Certainly for the media company and maybe for the agency, though by no means for the marketer.

If I were a CEO at one of the large marketers who allowed my cash to be leveraged by a big media-buying firm, I would have to wonder whether the media company and media buying agent had done well in other ways, perhaps at my expense.

From the standpoint of the media-buying firm CEO, by offloading most of the planning to the networks I can cut more unnecessary planning staff to increase profits.

As the media company CEO, I’d be dancing in my penthouse office, having weakened if not eliminated any agency media planning interference between the network and the marketer. Getting rid of those pesky agency planners who want to maintain control of the budget, while connecting on a planning level direct with the marketer is good news, indeed.

A few years ago, people used to say that business success required “a laser focus.” At cocktail parties or board meetings the talk was about re-defining what business you’re “really” in. For example, one might say that IBM wasn’t really in the “computer” business, it was in the “business solutions” business. By these standards, a media buying firm would be justified to offload its unnecessary (and unprofitable) planning control to the media properties. After all, they are compensated by their ability to negotiate.

However, intuitively I’ve never bought into that argument. Perhaps because I’m a planner by training I’ve never seen media buying - - however big the stick (budget) may be - - ever represent the key to a marketer’s success.

I was delighted recently to come across a new McKinsey study that measured how companies who’ve managed to “find the strategic sweet spot of moderate diversification… have not only outperformed focused companies 81% of the time but also generated higher total returns to shareholders every year except one since 1985.”

That’s why I have such a problem with the “laser focus” our large buying firms possess, which keeps bringing me back to the observation that the bulk of the 2002-03 upfront may in retrospect represent the largest "wasted" commitment of media dollars in the history of marketing.

Thankfully, not all of it was wasted. As compared to Disney, the Discovery Communications' Discovery Channel and The Learning Channel, Scripps Networks' HGTV, Food Network and D-I-Y, CNN, MTV, Comedy Central and Oxygen also announced very savvy and well packaged integrated deals.

These properties took the “two screen” approach, referring to both ITV as well as TV/Computer integrated solutions. Though I love the challenge of a complex media negotiation, knowing “what to buy” more than “how to buy,” is what makes money smart.

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