"With the economy being so tight and consolidation facing us on numerous fronts, big media operations are now going after smaller accounts that would have gone to midsize agencies, and it's making life tougher," says Corey Johnson, media director at Carmichael Lynch, Minneapolis, a midsize full-service agency owned by Interpublic Group of Cos.
Last year, Interpublic's Initiative picked off the $15 million media planning and buying portion of Carmichael Lynch's American Standard account, which it shared with the independent Richards Group, Dallas, and Mr. Johnson says his agency is constantly under the gun to defend its integrated model and the value of keeping media planning under the same roof as the creative product.
black box of claims
"We spend a lot of time dissecting what big shops claim to offer in their black box of media planning tools and research, and we can always prove that it's no mystery," he says. "In fact, these big media shops consist of a lot of silos and internal disconnects."
Retaining media planning has become the urgent priority for many full-service agencies, which believe they're in the best position to develop consumer-centered, media-neutral strategies and the creative to match-particularly as the media marketplace splinters.
But now media megashops are turning up the heat on the campaign to pull media planning under the same roof as media buying-by adding new disciplines that bear a curious resemblance to those of full-service advertising and promotion agencies.
For instance, in recent months several major media-buying operations have launched new shops-within-the-shop to provide expertise in areas such as product placement, sponsorship, PR and event marketing.
By adding these services, media buying operations aim to act as ringmasters of an increasingly diverse array of media options, and by controlling media planning, they assert they can maximize the efficiency and value of their media buying.
Media buyers don't believe the add-on services amount to trespassing on full-service shop territory, even though many of the new media channels are far more strategic and creative than about strictly handling media.
"We can't be limited to broadcast or print," says Marc Goldstein, CEO of WPP Group's MindShare, New York, a media megashop that combined the media buying and planning resources of J. Walter Thompson USA and Ogilvy & Mather USA. "We look at a palette of communication tools ... [and seek to] be creative and imaginative in reaching the consumer anywhere."
Balderdash, say traditional agencies, which interpret the latest maneuverings of the media megashops as a sign of desperation for new business, underscored by the slowdown in big global account shifts after the initial frenzy a few years ago when standalone shops emerged. Add to that the fact that AOL Time Warner, whose 2000 merger helped justify the rush for media agencies to consolidate, is unraveling and media observers expect to hear sometime this year about a separation of the two companies.
Everyone agrees the way consumers absorb media is changing rapidly, but traditional agencies say their more organic structures-where account planners, media planners, creatives and buyers hunker down together daily to solve problems in an integrated organization-best suit today's climate.
reacting to fast change
"Times are changing faster than these big agencies can reformat themselves," says Larry Spiegel, principal at the Richards Group. "As recently as a few years ago, volume mattered more in media. But as media becomes less of a commodity and more of a creative maneuver, there is less logic to having media planning handled by a big media-buying powerhouse."
Standalone media shops scoff at this logic.
"Clients ... benefit from media being consolidated at one shop, and clients have not backed off from the commitment to consolidation," says Mr. Goldstein.
Indeed, there are relatively few examples of big accounts that abandoned unbundled media agencies for one-stop-shop ad operations.
But one example that haunts some media agency watchers is Wendy's International, which last year moved its $230 million consolidated account from Cordiant Communications Group's Bates Worldwide, New York, to Interpublic's McCann-Erickson Worldwide (and its Universal McCann buying arm). According to reports, Wendy's was unhappy with Bates' decision to farm out media planning and buying duties to Optimedia, its not-so-close sibling shop. Optimedia is part of Zenith Optimedia Group, which is 25% owned by Cordiant.
There's no doubt, a close tie to the creative shops from which they were spun off helps many standalone media agencies win accounts. But Aegis Group's Carat North America has thrived without any such link, which proves that media expertise and leverage are key in managing an account, says Stacy Lippman, a managing director for Carat, New York.
In most cases, Carat controls the media planning as well as buying, and there are no specialized departments to handle emerging new media channels. "We have an entrepreneurial structure built on the European model of looking at media on the basis of the individual, and it allows us to explore any media vehicle that's appropriate," says Mr. Lippman.
Dan Rank, formerly managing director of media buying at Omnicom Group's megashop OMD USA, New York, claims neutrality in the debate over where media planning should be housed, since switching from the buying side to the sales side last year. In his new role Mr. Rank is exec VP-national sales manager for Vivendi Universal's Universal Television Group, Chicago.
"I talk to people on both sides of this issue every day, and there are advantages to both," he says. "However, take note that there are more financial benefits for holding companies in keeping media planning and buying together, and the bottom line usually rules."
The media business seems to be less about buying than selling, Mr. Rank adds. "I'm sitting across the table from media buyers now who are doing nothing but selling me on their services, which is an interesting change."