AGENCIES FIND MEDIA CLOUT IN OUTSIDE SERVICES

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JACKSONVILLE, Fla.-The future of integrated "full-service" agency media departments is in question as more shops move to outsource media services.

That was the prevalent theme of the first media conference held by the American Association of Advertising Agencies. The recent event drew more than 300 registrants, about half of whom were Four A's members, and the rest including a range of agency media operations, media department service vendors and consultants.

No advertisers or independent media service companies were on hand. But their presence was felt in most of the panel discussions as agency media managers cited increased pressure from clients and increased competition from independents as the main reasons for changing the way they do business.

While a few of the agencies represented adhered to the traditional full-service agency structure that integrates media with creative and account services, most appeared to be taking other paths.

Take Rich Hamilton, senior VP-media director at D'Arcy Masius Benton & Bowles, New York. Mr. Hamilton advocated using his agency's media buying clout to attract new revenues that could be reinvested in the media department. The agency recently spun off its network buying department into the independent TeleVest.

By comparison, Lord, Dentsu & Partners Senior VP-Media Director Larry Orell has gone to outsourcing, turning his agency's buying over to others. Currently, he said, about 80% of the agency's media is bought by KSL Media, New York.

The other 20% is bought through an agency of record arrangement with clients' other shops, or through parent Young & Rubicam.

KSL gives "me all the clout I need without paying for it," Mr. Orell said, noting that Lord Dentsu and its clients pay KSL no commissions and that the independent makes its money on the "spread" between expected prices and what's negotiated.

But Mike Lotito, media director at Ammirati & Puris, New York, questioned whether Lord Dentsu's arrangement "is in the client's best interest or the agency's best interest. And if you have to ask yourself that question, you are in trouble."

Mr. Lotito was one of the few full-service agency media directors represented who advocated the traditional full-service approach.

Herb Maneloveg, president of consultancy Maneloveg Media Marketing Services, White Plains, N.Y., agreed with that approach, saying marketers aren't disappointed so much with their agencies' media departments as with their "strategies."

Another consultant, Herb Zeltner, president of Herbert Zeltner Inc., North Salem, N.Y., agreed: "There is this nagging problem of relatively junior people mindlessly cranking it out. And a lack of senior supervision."

Executives from many smaller agencies said their big concern is finding more efficient means of providing media services.

"For a small advertising agency, outsourcing is here today and it's here to stay," said Rich Simms, president of the Media Investment Group of FitzGerald & Co., Cranston, R.I.

Last year, Mr. Simms struck a deal with Ogilvy & Mather to handle his agency's network TV buying assignments.

He said the deal enabled the $50 million agency to "legitimately lay claim to $1 billion in network buying clout.

"There is no reason to have your clients outgrow you as a media resource," he said.

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