HOT SPOTS: MEXICO, BRAZIL: UNILEVER RATTLES MEDIA OWNERS WITH CHANGES

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[Mexico City] Latin American media owners accustomed to setting the rules in their own markets are facing a challenge to their power. Unilever, Latin America's biggest advertiser with $333 million in spending according to Ad Age International figures, is ushering international trends into the region-and as a result changing the way national media is bought.

In Mexico, Unilever is moving its entire 1997 TV budget from Grupo Televisa to upstart rival broadcaster Television Azteca. In a market where Unilever is the country's 15th largest advertiser with spending of $18.4 million, the company's move sent shock waves through the industry. Televisa once enjoyed a virtual monopoly on TV advertising in Mexico but now is succumbing to an international pattern in which the dominant broadcaster gradually loses market share, first to national rivals and eventually to cable and satellite TV.

In Brazil, Unilever has unified media buying through its Advanced Media Center, administered by J. Walter Thompson. The shift comes at a time when Brazilian media owners have united to condemn centralized media buying and the formation of the kind of media buying groups that already dominate Europe but are just emerging in Asia and Latin America.

Brazil's main TV network, Rede Globo, fired one of the earliest salvos in the opposition. Octavio Florisbal, Globo's commercial superintendent, wrote in the network's internal magazine, BIP: "The [media buying] bureaus get most of the media budgets in Europe and want to come to Brazil and turn ad agencies into creative boutiques, under predatory commercial conditions."

In Europe, about 40% of media buying is controlled by independent media buying groups like Carat and CIA International, and agency-linked media buyers including Cordiant's Zenith, Grey Advertising's MediaCom and Ammirati Puris Lintas' Initiative Media. All voice ambitions to become global media buying brands but are soft-pedaling on their plans for Brazil because of the hostility from the country's media owners.

And although Zenith is opening in other markets to buy media for Cordiant-owned Saatchi & Saatchi Advertising and Bates Worldwide, Sergio Amado, president of Denison Bates, SÌo Paulo, promises that while he's alive, Bates won't bring a media buying group to Brazil. 9We even sent Octavio Florisbal a letter, explaining [our position],9 he said.

In late November, 22 of Brazil's leading publishers and TV networks took up the fight, publishing an open letter against media buying groups in Brazilian newspapers. The undersigned vowed in print to 9Discourage, through the government and private enterprise, the creation of closed, centralized media buyers, where agencies don't participate in all stages of the media function. ...In the markets where they exist, these media buying groups are dedicated more to [financial] speculation than effective use of advertisers' budgets.9

At the heart of Brazilian resistance to media buying groups is a cozy but rarely mentioned arrangement between media owners and agencies known as 9bonus de veiculacao, a hefty, volume-based rebate to the agencies from media owners.

Unilever, Brazil's largest advertiser with a $130 million ad budget, recently closed a TV deal with Rede Globo. Orlando Lopes, media director at Gessy Lever, Unilever's Brazilian subsidiary, said Unilever's new centralized media operation includes a role for other agencies besides JWT and therefore is not in conflict with Globo's rejection of centralized media buying.

9Globo is a great partner, and we couldn't have a better relationship,9 Mr. Lopes said.

In Mexico, the big media standoff pitting market leader Televisa against fast-growing Azteca has been evident for months. Last year, the two networks slugged it out in a series of tit-for-tat print ads as Televisa owner Emilio Azacarraga, [Ed: please put an accent on the second a] known as El Tigre (the Tiger) and one of Mexico's richest men, and Televisa owner Ricardo Salinas Pliego tried to outdo each other.

On its side, Azteca has plenty of ammunition: In the first half of 1996 its average audience share was a healthy 25% compared with Televisa's 73-74% of audience share, said a media analyst, based in Mexico City, at an international brokerage house. For the same period a year earlier, Azteca's audience share averaged only 15%. On the ratings front the same analyst reported that Azteca also had made considerable gains.

The company also claims that its ad revenue has increased as a consequence of its growing market position. In the first nine months of 1996, Azteca's share of ad revenue was 23.8%, compared with the 13.6% it registered in the same period in 1995.

Televisa remains the world's biggest producer of Spanish-language programming, but it seems that that claim to fame is no longer enough. Unilever declined to comment for this article, but one company executive, who spoke on condition of anonymity, complained of "inflexibility" and "arrogance" when discussing Televisa.

For example, Televisa advertisers pay for the full year's advertising in advance through the so-called French Plan, which accounts for roughly 85% of the broadcaster's annual advertising revenue. Although in the past advertisers had little choice but to buy Televisa because of its market position, Azteca's growing market share and more flexible ad sales are succeeding in making advertisers think twice.

"Everybody's looking for more useful and efficient media. ...With Televisa you have to increase your investment and pay upfront by Oct. 31 at a time when its market share and ratings are declining,9 said Nestle's [Ed: please put accent on the e] media co-ordinator, Halim Trujillo. Azteca advertisers are charged according to program ratings.

Unilever reportedly did not want to leave Televisa completely; one source said that JWT, central media agency for four Unilever companies in Mexico, even told senior Unilever managers that the agency 9could not be held responsible for [Unilever's] declining market share9 resulting from Unilever leaving Televisa. But Televisa's unwillingness to negotiate nudged Unilever into Azteca's welcoming arms.

Further, a major international advertiser that switched exclusively to Azteca last year provides a positive testimonial.

"At first we were really skeptical, but we have maintained our market share," said a Kraft Foods de Mexico executive who spoke on condition of anonymity. 9Azteca guarantees your investment, unlike Televisa, which can't even guarantee you transmission on the program you want." Kraft now airs eight to nine spots daily on Azteca compared with the five to six previously run by Televisa. In addition, Azteca works more creatively with advertisers by offering things like sponsorship deals, the executive said.

The $5 million Kraft spent with Azteca in 1995 (the most recent year for which figures are available) totaled half of what it paid Televisa the year before. The investment worked out to 43% less in cost-per-rating-point for programs targeted at homemakers, and 76% less for children's programming.

The future for Mexican television is likely seen in the kind of split another global marketer, Nestle, practices: allocating 30-40% of its TV budget to Azteca and 60-70% to Televisa.

"When you buy just Azteca you sacrifice your reach,9 Nestle's Mr. Trujillo said. 9The ideal media plan in a market like Mexico's is to buy both. ...We'll keep Televisa and keep Azteca as along as [the latter's] market share and ratings continue to increase.9

Teodoro Husemann, vice president, client services director, D'Arcy Masius Benton & Bowles, Mexico, agreed that sharing the wealth will become the norm for advertisers. 9We'll see more advertisers spreading their investments over the two networks,9 he said. 9It's the beginning of a trend."

Contributor: Claudia Penteado in Rio de JaneirHot spots: Mexico, Brazil "The [media buying] bureaus get most of the media budgets in Europe and want to come to Brazil and turn ad agencies into creative boutiques, under predatory commercial conditions."

In late November, 22 of Brazil's leading publishers and TV networks took up the fight, publishing an open letter against media buying groups in Brazilian newspapers.

At the heart of Brazilian resistance to media buying groups is a cozy but rarely mentioned arrangement between media owners and agencies known as "bonus de veicula‡Ìo," a hefty, volume-based rebate to the agencies from media owners.

In Mexico, the big media standoff pitting market leader Televisa against fast-growing Azteca has been evident for months.

On its side, Azteca has plenty of ammunition: In the first half of 1996 its average audience share was a healthy 25% compared with Televisa's 73-74% of audience share, said a media analyst, based in Mexico City, at an international brokerage house. For the same period a year earlier, Azteca's audience share averaged only 15%. On the ratings front the same analyst reported that Azteca also had made considerable gains.

The company also claims that its share of ad revenue has increased in the first nine months of 1996 to 23.8%, from 13.6% in the same period in 1995.

Televisa remains the world's biggest producer of Spanish-language programming, but it seems that that claim to fame is no longer enough. Unilever declined to comment for this article, but one company executive, who spoke on condition of anonymity, complained of "inflexibility" and "arrogance" when discussing Televisa.

For example, Televisa advertisers pay for the full year's advertising in advance through the so-called French Plan, which accounts for roughly 85% of the broadcaster's annual advertising revenue. Azteca's growing market share and more flexible ad sales are succeeding in making advertisers think twice, however.

"Everybody's looking for more useful and efficient media. ...With Televisa you have to increase your investment and pay upfront by Oct. 31 at a time when its market share and ratings are declining," said Nestl‚'s media co-ordinator, Halim Trujillo. Azteca advertisers are charged according to program ratings.

Unilever reportedly did not want to leave Televisa completely; one source said that JWT, central media agency for four Unilever companies in Mexico, even told senior Unilever managers that the agency "could not be held responsible for [Unilever's] declining market share" resulting from Unilever leaving Televisa. But Televisa's unwillingness to negotiate nudged Unilever into Azteca's welcoming arms.

Further, a major international advertiser that switched exclusively to Azteca last year provides a positive testimonial.

"At first we were really skeptical, but we have maintained our market share," said a Kraft Foods de Mexico executive who spoke on condition of anonymity. "Azteca guarantees your investment, unlike Televisa, which can't even guarantee you transmission on the program you want." Kraft now airs eight to nine spots daily on Azteca compared with the five to six previously run by Televisa. In addition, Azteca works more creatively with advertisers by offering things like sponsorship deals, the executive said.

The $5 million Kraft spent with Azteca in 1995 totaled half of what it paid Televisa the year before. The investment worked out to 43% less in cost-per-rating-point for programs targeted at homemakers, and 76% less for children's programming.

The future for Mexican television is likely seen in the kind of split another global marketer, Nestle, practices: allocating 30-40% of its TV budget to Azteca and 60-70% to Televisa.

"When you buy just Azteca you sacrifice your reach," Nestle's Mr. Trujillo said. "The ideal media plan in a market like Mexico's is to buy both. ...We'll keep Televisa and keep Azteca as long as [the latter's] market share and ratings continue to increase."

Teodoro Husemann, vice president, client services director, D'Arcy Masius Benton & Bowles, Mexico, added, "We'll see more advertisers spreading their investments over the two networks," he said. "It's the beginning of a trend."

Contributor: Claudia Penteado in Rio de Janeiro

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