• by Tim McHale , May 8, 2002

While my entire career has been on the media (department) side, half of it has been as a member of a media agency, or what was once known as a media buying service.

Back in the 80’s, when I left a traditional ad agency to join a buying service, we used to get blasted by advertising agencies who screamed that the client was served best by having 100% of the media planning, buying, stewardship, post analysis and reconciliation all together with the rest of the creative agency. In fact, it was common knowledge that the creative agency “partner” impatiently waited for us to foul up somehow so they could win the media responsibility back. We had to be on our toes, or else.

Boy, what a difference a generation makes! Now, every major advertising agency holding company has a central media-only agency operation completely separate from the rest of the advertising agencies owned by the firm.

I agree with this strategy and know first-hand the pain of creating these type of organizations, separating the media department from the creative portion of the organization to create a larger, media operation.

Size does matter. In traditional media, the shop that can boast $1 billion dollars in media spend will get a better deal than the independent ad agency that spends only $25 million in traditional.

What I question, though, is whether a large media agency firm focusing primarily on traditional can extend that clout to their interactive media buying area. Can the billion-dollar shop that spends $10 million in interactive media beat the small online-focused operation that spends $10 million or less? Who has more clout in this situation? Not so easy, is it?

We know that the bulk of major deals at the large portals are done directly with the portal, without involving the large creative and media agency. I’m not so sure that the giant behemoth will beat out the little guy here. In fact, with large media agency managements still overwhelmingly focused on the huge TV budgets, I am unaware if any of them have learned how to truly leverage their ordinarily big stick in the interactive space. The economics are not in their favor.

Over the last decade, until the recent depression hit, consumers often noticed the share of mind wars staged in broadcast. The competitors were often in the beverage, telecommunications and automotive areas. It was not unusual, especially in NFL post-season play, to see competitors duke it out with highly competitive and comparative spots that boasted a sliver of a difference superiority vis-à-vis their competition.

For better or worse, major marketers in these categories have not yet taken the fight into the interactive rink. In fact, it’s just the opposite. The bulk of the noise has been made by online companies fighting to take their next breath versus the heavy breathing of a share of budget war, which means that the interactive media business now is about as even a playing field between large firms and small firms as it has ever been.

So which type of firm has the chops to get the better deal? Small shops! Here’s why:

No large distractions – Small shops don’t have to worry about allocating resources to keep their 35 $50 million TV deals fresh. They’re focusing on the swift changes still impacting the interactive media business. They have their eye on the interactive media ball;

Financials covered – Small shops have already figured out how to price themselves relative to interactive media, or else they wouldn’t be around today. It’s going to be very difficult for a large media agency to justify moving $100 million out of traditional and into interactive without asking the client to increase their servicing fee by 500% or more per media dollar;

Nimble – Interactive media is very labor intensive. There’s no getting around that. What few technology and IT people there are still on the payroll at big shops are the A/V guys who help the staff turn their computers on and off. Few if any large shops are focusing on new technology or data analytics products entering the market every day, which makes interactive more, cost efficient to manage;

Senior level attention – In small shops, senior management is much more likely to be more intimately involved with each component of the deal. Most senior media execs at the large buying shops have spent their entire careers in traditional. Interactive makes them nervous. They’re a fish out of water. They’re less likely to know the difference between serving vs. hosting, let alone know the top management at various ad networks or portals;

Stronger knowledge base – Small shops are most likely “over servicing” their precious few interactive clients still alive and marketing, probably with some sort of CPA deals, which over time lets the interactive media buyer truly understand what the lowest cost in the market is versus large shops, who are probably servicing small branding-based clients.

These factors are going to continue to make the interactive media business very interesting in the next cycle. Stay tuned.