• by Joe Mandese  @mp_joemandese, April 27, 2005

A year after launching a new, more sophisticated form of auditing media buys in the U.S. marketplace, a leading U.K.-based media auditing firm has found some surprising differences in the way agencies buy media in the U.S. and the rest of the world. One of the most significant conclusions, says John Billett, founder of London-based Billetts, and its fledgling Media Performance Monitoring America unit, is that the "spread" in the costs of media buys in the U.S. is much greater than abroad, meaning there is a much wider gap in the prices paid by marketers and agencies. Other big findings include the fact that the size of a media-buying organization has little if anything to do with the prices they pay, and that multinational marketers appear to be embracing the practice of media auditing much faster than domestic U.S. advertisers.

Billett, who competes in the U.S. with home-grown "media performance monitors" such as Media IQ who work with marketers and agencies to improve the performance of their media buys, says the business is growing, and that he also has launched a "nascent" business to monitor interactive and online media buys and plans to introduce a "print product" by the end of the year that would evaluate the performance of magazine ad buys. To date, he has worked with big multinational marketers such as Nissan, KFC, Sony, Ford and Unilever and their agencies on their national TV buys in the U.S. One "indigenous" U.S. advertiser to embrace the service is Ace Hardware.

Billett says MPMA has found the gap in TV buying costs among the U.S. agencies he has evaluated is in the plus or minus 25 percent range, 10 percentage points higher than the European average of plus or minus 15 percent.

"You might have thought that this has something to do with volume," he says, "but it does not. And I think this is the best news possible for media agencies. It says that it isn't simply about scale, but that strategy and negotiating skills do make a difference."

Being "nimble," using negotiating skills, and being prepared to move TV advertising budgets around or shift them into other media, he says, is what influences prices more than the volume of ad budgets controlled by a media buyer.

Billett says this revelation runs contrary to the trend toward consolidation of media buys into a handful of mega media agencies.

"If this is true, why are agencies developing scale? My conclusion is that it's for their own benefit, not their clients," he charges.

One reason he says the U.S. market has a bigger gap than Europe's media buys, is that the U.S. marketplace is an older and more mature TV advertising marketplace. That means marketers who came into the market at different points in time tend to pay markedly different CPMs.

Mike Lotito, managing partner of Billetts rival Media IQ, says his firm has found even more significant pricing gaps among U.S. agencies. "The range is gigantic," says Lotito. "There are so many issues that come into what price you get, but if you look at the base of the advertiser and the type of category they're in, it makes sense."

Lotito and Erwin Ephron, a consultant who is an investor in and advisor to MPMA, will share more insights about the U.S. TV advertising marketplace Thursday during MediaPost's Outfront Conference in New York.

Meanwhile, Lotito says marketers are beginning to embrace the concept of performance monitoring, which goes well beyond price to evaluate the schedule, mix of ads, and the position of ads with in commercial pods, as are their agencies and the TV networks.

"This is all about making TV work again - work the way it did 15 years ago when you could buy three spots and reach 90 percent of the country. People are beginning to understand that," he says.