Commentary
Time To Heed P&G's Call To Fundamentally Change TV Ad Buying?
- by Dave Morgan , Featured Contributor, September 24, 2020
Calls to change the world of TV ad buying are not new. For as long as there have been upfronts -- before my time -- some have wanted to break TV’s futures market, originally established to help pre-fund show productions by selling ad time wholesale to agencies and their large advertiser clients.
Yesterday at the Association of National Advertisers’ Media & Measurement Conference, Procter & Gamble Chief Brand Officer Marc Pritchard dropped a bombshell. Pritchard said his team changed the way one of the world’s largest advertisers makes its largest media expenditures. The company did the TV ad upfront on its own this year.
As reported today in MediaPost Agency Daily, the move was part of P&G’s push for the entire industry to reform how TV media is bought and sold. “[T]hat’s why at P&G we’ve taken control of when we negotiate and buy TV media,” Pritchard said, which “means negotiating directly with as many media owners as possible,” MAD reported. Pritchard “stressed that the company’s agencies continue to play an important role as ‘contributing partners’ but ‘we are in the lead.’”
advertisement
advertisement
Yes, most large TV advertisers have historically been pretty involved in their TV upfronts -- many see this as a perk, in fact -- but few have done it on their own and handled the network negotiations directly and exclusively. Most marketers have assumed that you need agencies to negotiate the best rates, though according to Pritchard, P&G got better deals without agencies than most in the market this year.
Clearly, one of Pritchard’s strategies here is to drive a wedge between agencies and networks — realizing that they have historically supported each other in maintaining the upfront process, its timing on the calendar, its large annual commitments and its underlying pricing structures and inflexibility.
If he can encourage others to go around their agencies, quite likely more and more networks will need to give marketers the kinds of pricing, transparency, cancellation flexibility and calendar timing that P&G got on its own this year.
Also, to be clear, Pritchard didn’t single out the TV ad market as the only archaic one in need of a change. He also took on the world of programmatic buying of digital ads for its opacity, and called out the social networks for their failure to control the content on their platforms.
P&G and Pritchard are itching for a lot of change in the media-buying world. What do you think? Will it work?
Marc's words are rather vague on specifics. One might assume that P&G bought all of its national TV "upfront" time itself this year---but who at P&G actually handled these transactions? And what did the P&G network time buyers use for rating data? I haven't heard of any experienced agency buying experts being hired by P&G recently---so did the company's regular media folks handle it---without Nielsen data? Has P&G subscribed to the full Nielsen service---I haven't seen anything indicating that this is the case? Or did they borrow Nielsens from the sellers and/or the agencies. And who did the analysis---like tracking the ratings and estimating futures? Again, I may have missed it, but I haven't seen notices of major new hires among such people.
In my opinion, once a serious examination of the realities involved and the trade-offs---like converting P&G's buys into what amounts to high CPM scatter from low CPM upfront---are evaluated that P&G will continue to use its skilled agencies for the upfront---perhaps at a slightly lower fee---while dabbling in direct deals on product placement and digital venues with the networks. Yep, it looks more like an attempt to pressure the agencies and sellers as opposed to making a quantum break with the traditional buying process. But, maybe, I'm wrong. One way to keep tabs on this will be to watch P&G's hires as new faces will be needed to execute the earth shattering change that is being suggested.
Will this change the way most other advertisers buy TV? In a few words, Dave---- I doubt it.
I read his comments, as well as other stories on this P&G/TV topic. It's unfair to place the blame as an industry issue - it's a P&G issue. The upfronts serve a purpose, but no agency, nor any brand, is forced to participate in the upfronts. P&G needs to fundamentally change the way it approaches buying and evaluating media vs. blaming the industry for its inadequate processes.
The biggest issue with the upfronts for companies like P&G that throw $1 billion into the market at once is it's a "shoot now, sort it out later" approach. They spend a ton of money to get "efficiencies" and then try to figure out strategic placements by brand after the fact. That has never been an intelligent approach.
Dan, to your point, one of Marc's complaints is that the agency buyers "buy too much". This strikes me as an incredible statement as the buyers are merely buying to the collective brand needs by daypart, network type, quarter, etc. with specific budgets for each type of buy set in advance based on estimates---usually reasonable ones---of future costs and ratings. I can't imagine the agency of record buying 10,000 daytime broadcast GRPs when the brands only wanted 5,000---can you? What's more, unless things have really changed, no buyer cuts deals with a network without first clearing it with the client. So, as you said, it's likely that this is more a P&G internal problem than an agency performance issue---but, as we all know, the agencies will never dare to comment---except in suppport of their client---even if they think he is using them as whipping boys.
Just to amplify Ed's point, if any agency buyer went to his immediate supervisor with a plan that bought more GRP's than the media plan called for, they would have been turned right around and sent back to their office with instructions to modify the buy to bring it in at the goals called for in the plan. That overacheiving plan would never get anywhere close to the client (or at least wouldn't at the agencies I bought at--BBDO and Y&R--back in the day).
So, given the insights offered here by some very bright commentators, is something else really going on? Is this part of his negotiation strategy to drive pricing? P&G has always gotten good pricing for a number of reasons and any media outlet I've worked for was always happy to communicate with an advertiser directly. Can't hurt.
Jack, I think that transparency is a big driver. Marc is tired of the undisclosed stuff their agencies have taken from networks and resold, many times to them. Plus, he wants to change the calendar and option policies, which big agencies have few incentives to do, but networks will do in direct deals.
Dave, has it been established-----or has P&G stated so----that its AOR agencies in charge of buying national TV time were getting kickbacks in the form of bonus spots and selling these to P&G using the client's own money in such a dishonest manner? I have not seen or heard anything to support the existence of such an objectionable practice. We have all heard in the now distant past (2015 and earlier ) that some agencies---or, perhaps only one---obtained bonus spots as a reward for large dollar placements that may have been converted into cash via sale to other parties---but not necessarily, to their clients. Also, there have been zero public complaints from advertisers that their agency time buyers were buying "too much"---which is a very strange charge since it's the brands, not the buyers who set GRP goals.
Marc is perfectly within his rights to suggest ways to improve the process and to apply whatever pressure he can---for whatever purpose----to both the agencies and the sellers. I think that we all agree wirth him that the system needs adjustment---or, more fundamental change. However, we may be reading too much into his statements--which I find to be extremely vague. I doubt that the upfronts are about to topple or that thousands of advertisers from all sorts of divergent product/service categories will unite under the P&G banner and rush to upset the apple cart. That kind of behavior simply isn't in their genes----especially as so many CMOs just can't be bothered to pay close attention to the boring---to them---media "numbers game".
Ed, I don't know that we know specifically, other than many hundreds of millions have been recovered by a number of clients each for undiclosed discounts or bonus spots, and that all of the large agencies have signficant operations in barter and pincipal inventory selling that generate(d) a signficiant portion of their total media buying profits and that Marc has been very vocal on the issue of transparency. And, he made transparency a big part of his talk.
What we can know for certain is that if the markteer negotiates themselves, havine their pockets picked through kick-backs is one less thing for them to worry about.
Dave, you may be right, however I have a hunch that if the advertiser payed more attention to the buying process and required its media people to be more than passive accomplices but, rather very proactive regarding the details---for example, sitting in on the negotiations, not just taking the agency's word for everything---then a better solution might be found. In other words, hold your own people responsible when errors are made in planning and executing the buys. Do that and they will tighten up the process if, for no other reason than to save their own necks.
Going it alone has many pitfalls, not the least of which is not knowing what's happening in the marketplace---which can mean that the sellers will be able to charge you more than you might pay using a large agency. Properly supervised, the latter can work very efficiently---but many clients don't seem to understand that they should be more involved in the process---including the back and forth deal making.
Ed, yes, tighter oversight would be good. But, it's not theoretical to me. I have been shaken diwn by all if the big agencies. It bothers me when people try to create excuses for how they operate. Undisclosed rebates are endemic. I've been pushed hard, and always refused, and always shut off. That is why my company goes direct to marketer.
To be clear on my earler points about the lack of transparency, that right is now built into many media agency contracts. In many, many cases, media agencies no longer carry true "agent" contractual obligations and can explicitly take undisclosed principal positions. Many times, these are take it or leave it provisions tied to maintaining or reducing fees. And we know that every client wants reduced fees. Thus, folks like Marc and P&G and, I suspect, many other larger TV ad buyers will do a lot of their negotiating direct to lock in inventory, rates and options, and then possibly use their agencies as "supporting partners" to physically manage the transacotions. Also, we are likely to see more "TV ad tech" that helps them manage those transactions in-house.
Ed, if you are going to expend the effort to be heavily engaged in the process, you are likely better off leading the process. Agencies still will want to work with you and will share what they know about rates and pricing. That's plenty of transparency.