OPTIMIZERS REDEFINE THE ART OF THE DEAL #1

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Media roundtable: Micromanaging how time is bought will dramatically affect how TV sells itself

Media issues have reached advertising industry headlines in seemingly unprecedented fashion during the past year. Nary a week went by when it wasn't revealed some major client was consolidating its media buying, from Procter & Gamble Co. to Schering-Plough Corp.

Optimizers, those tricky computer programs that help planners and buyers buy more efficiently, have come to the U.S. in a big way. Record prices have been reported for commercial time on the broadcast networks, be it for the season finale of "Seinfeld" later this week or next year's Super Bowl. Still, it is cable that's getting most of the buzz and, cable network executives hope, a higher percentage of ad dollars. And syndicators are eyeing a bigger portion of the pie as well.

As agencies and marketers get ready for the broadcast networks' prime-time schedule presentations next week, Advertising Age sat down with the bright minds in the media world to find out what all of this means.

Daryl Simm, president of Optimum Media Direction Group at Omnicom Group, New York, brings a fresh perspective and important media ideas not only from Omnicom but with a healthy dose of client philosophy thrown in-Mr. Simm recently hails from P&G, where he was media guru extraordinaire.

Irwin Gotlieb, president-CEO, MacManus Group's TeleVest, New York, knows Mr. Simm well-it was TeleVest that won the shootout for P&G's TV buying. Mr. Gotlieb has a reputation for having one of the savviest media minds around, and he carries huge billings to prove it.

Jean Pool, exec VP-director of North American media services at J. Walter Thompson USA, New York, is an outspoken, no-nonsense media strategist. If she were a stock broker she'd be a contrarian, and it's a position she relishes.

Brian Jacobs, managing director, Carat International, London, is a Brit who gave this discussion a great European flavor. Carat has tamed the competition in Europe, and now has a beachhead in the U.S.

Ad Age Executive Editor Scott Donaton and Media Editor Chuck Ross posed the questions. Mr. Jacobs participated by phone from his office in London; Mr. Simm called in from Hong Kong, where he was on a business trip.

Advertising Age: As we approach the upfront marketplace, optimizers continues to be a buzz word. How do you see optimizers developing in the U.S. based on what they've brought to the party in other parts of the world?

Brian Jacobs: People are so used to working with them in Europe that they're not any form of competitive advantage any longer, really. Everybody has one or one very like it and we all use them to a considerable degree.

What optimizers do for you at the end of the day really and truly is buy the planners time to think. They allow you to look at a whole number of possible schedules very quickly and finish up with the one that happens to best suit your particular requirements, whatever they might be.

I think it's a mistake you should think they're some sort of magic. If anyone was to think there was some kind of magic black box where you just tap in the questions and out comes the answer, it's never as simple as that.

They've allowed us to develop into a whole bunch of new areas of media planning far faster than we would have done if we'd had to spend all of our time calculating the best possible schedule to reach a target.

AA: What other areas of media planning has it allowed you to get into?

Mr. Jacobs: Everybody over here now is very involved in return on investment accountability in econometric modeling, and the sort of work that looks at how different types of ads affect people in different ways in different sorts of program environments.

There's a lot of original work going on into how different target audiences use media, how they use media in different ways at different times of the day.

I would say just generally the way this will evolve in the States is with more of an eye toward the quality of the media plan and the impact of a media plan, and away from just media numbers. The optimizers give you the media numbers.

Since we have the numbers, we can look at other elements, such as different levels of exposure for people who are in different parts of the purchase cycle. That's the sort of work we're doing now and I think that's what media planning is evolving into and I'm sure that's what will happen in the States as well.

Irwin Gotlieb: If you compare the U.S. context to much of Europe, we all grew up spending the bulk of our time honing our negotiating skills, because we were in a marketplace where negotiation was the paramount skill set. And we dealt in negotiation in this market the way commodity price manipulation takes place and we developed a strong expertise in that area.

Many of our counterparts in Europe, as recently as only a few years ago, still had rate-card markets that were only minimally negotiable. So instead of focusing on getting better prices, they had to figure out ways to buy it smarter.

That had dawned on us here, but because we were so focused on negotiation and because we didn't have the data to support the decision-making process, we couldn't deal with it anyway, so we just went on with our lives focusing on the negotiation side. Our counterparts in Europe got smarter and smarter at figuring out just what it was you should be negotiating for as opposed to figuring out how to negotiate for it.

We still have an incredible amount to learn here. Optimization in and of itself is certainly not the last step of the process. It's merely the first step.

Now that we have respondent level data, we need to crunch an enormous amount of information very quickly and you really can't do it without a tool set that allows you to filter through the information.

The term optimization in and of itself is probably inappropriate. I don't know about you guys in Europe, Brian, but the optimizers don't give you optimums; they give you options.

Mr. Jacobs: I remember one of the first optimizer programs I ever saw was in the late 1970s, and it was hopeless, really. It sounds funny now and it's exaggerating to make the point, but it would recommend 24 insertions a year in Reader's Digest or something because Reader's Digest was the cheapest book-so they just carried on buying it even though there are only are 12 insertions a year.

Optimizers are not going to replace the inherent skill of a good media planner. What they're going to do is let him go through a number of options quickly and then pick the one that's best suited for what he wants to try to do.

Mr. Gotlieb: Yes, they help you crunch through an awful lot of stuff. What Brian touched on is a very, very critical issue: Now that we have the tools that allow us to achieve communications objectives in a reasonably efficient manner, the bigger question then becomes what should your communication objective be?

And that's the kind of work we are just beginning to do here.

AA: How do you think planning and buying are going to be changing this year and next year as we get into this?

Jean Pool: The classic optimization things that are going on in Europe can't happen here; at least can't happen here right now. A couple of things are in the way. A company by the name of Nielsen [Media Research] that won't really allow us actual access to the data.

We get one minute an hour or something now. If you're basing your decisions on a random minute, which could be either program or commercial, the basis of your decision is wrong. So, if you start from wrong, you only add more wrong on top of it.

They say that one day we'll get access to this stuff, but if you think about the six networks, 1,100 commercial TV stations, the 50 cable networks-it's going to be a long ways down the road before we get that kind of information.

And, no matter what optimizer you're using right now, it really doesn't even approach the spot market, where most of broadcast money is going.

So, I'm not terribly interested in the optimizer. Oh, by the way, we bought one. The one we're using is a daypart program-genre type thing, which at least is sensible for us. I'm much more interested in return on investment and modeling, which we've been doing quite a bit of and I find fascinating.

That's going to change our media planners into communications

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