OPTIMIZERS REDEFINE THE ART OF THE DEAL (5)

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in general, when you don't have optimizers to prove the effectiveness of the medium?

Ms. Pool: The optimizers will include magazines eventually.

Mr. Gotlieb: And optimizers don't prove effectiveness at all.

Mr. Jacobs: We do work on positions and readership of a particular class of positions by different sorts of people, and we try to understand it the same way you try to understand how people watch TV shows.

AA: One pundit has advanced the argument that with increasing fragmentation we may come back to an age where general-interest magazines are the only mass medium. Is that realistic?

Mr. Gotlieb: I don't think TV will ever get to the point where it is a narrow 1-rated medium only. There's a fundamental cause for that, and that is -- unlike radio where really all you need to do is buy a bunch of CDs and you have automated radio stations that cost nothing to run -- TV requires TV programming. And TV programming will continue to be inherently expensive and you have to amortize that cost.

The guy who goes out and spends a significant amount of resource and money and creativity and develops programming that attracts audiences is still going to be able to pull numbers.

Ms. Pool: It's all about programming.

AA: As we see more and more advertisers consolidating, becoming bigger, may it make sense for more advertisers to get in on the programming to get their message out?

Mr. Simm: If programming means associating yourself with a particular environment that is really on strategy for you as an advertiser or for one of your brands, and you can ride the image of that program to success, then yes, we'll continue to see that.

We'll likely see more of it as programs are produced and have a longer life cycle in terms of repeats at different stages of their development -- network syndication, international cable and so forth.

If you're talking about programming in the context of deals that P&G has done (with Paramount and Columbia TriStar), I can tell you most clients are not going to be able to afford those kind of programming deals.

Those kind of programming deals require a long, long-term view and a significant commitment and investment to get in the business.

Mr. Jacobs: Yes. To reiterate what Daryl just said, it depends what you mean by programming.

There are lots and lots of ways where advertisers -- and not big advertisers particularly -- can get involved in programming by associating themselves with something, by doing deals, by using programming as a way to cheaper airtime.

Now, if you're talking about pointing a camera, you know, controlling and pointing the camera, investing in the program and actually going out there and fundamentally owning it, then that's a very different question altogether. You're not going to see too many of those around.

I was listening to your discussion about the fragmentation issue and reaching people. What it means -- I think Jean said it -- is you've just got to find better ways, smarter ways, different ways of connecting with the consumer. And one of those ways might be some form of programming time. It might not, but it might be.

AA: For example?

Mr. Jacobs: It's another option that's open to you. We find these days a number of media plans we write include cooperative ventures with other advertisers, between advertisers, and all sorts of stuff that five years ago never even existed.

People are getting smarter about how they should reach the consumer. If you can't do it through the traditional way, be it through TV or newspapers, magazines, whatever, then you do it through non-traditional ways and you connect with the consumer in a different and creative and unusual and standout manner. Programming could be one of those.

AA: Are we going to hear a holding company say, "To save money, why do I need research departments in all these agencies?" Or various things of that nature. Is that where we're heading with all this?

Mr. Jacobs: Isn't that what WPP Group is doing in Europe and Asia with MindShare?

Ms. Pool: Yes. MindShare is planning, buying, research -- it's the entire operation.

Mr. Jacobs: Basically, it has put together the media departments of two agencies. And off you go. Very good idea, by the way.

Mr. Simm: I agree. If you're talking about making that value balance work for the advertiser, pulling together services of that kind that are technical services that then can be interpreted separately, at the individual units for the clients' strategic needs, it makes a lot of sense.

Ms. Pool: And sold separately.

Mr. Simm: Makes every bit of sense in the world.

Mr. Jacobs: It's kind of what we do. We have different operating units in the U.K., but we have one research operation in the U.K. called Carat Insight that basically services the operation units.

AA: Do you see that model being repeated here in the U.S.?

Mr. Jacobs: Logically there is no reason why not, except that from my very limited knowledge of American agency networks, the networks -- the individual component parts of the network, of each network -- tend to be more independent, perhaps, than they do in some markets in Europe.

Mr. Gotlieb: I can't see why a holding company wouldn't [put research together]. The only reason not to do that is perhaps political, or turf protection.

Mr. Jacobs: Right.

Mr. Gotlieb: Or something like that. But, from a straight business standpoint, there is no reason not to do that.

AA: What about planning? Should it be separate from creative?

Mr. Gotlieb: Where you house planning is. . .

Ms. Pool: . . .It's almost both places.

Mr. Gotlieb: It's almost both places. You could justify either one. There are no fundamental efficiencies to consolidating that, necessarily. In some smaller territories, perhaps, there are. But in a large territory like this, you could put it anyplace.

AA: News Corp. recently announced a worldwide integrated media and marketing group to work with advertisers on its disperate properties. As we see consolidation moving on both sides, are we finally going to see some synergistic deals with marketers?

Mr. Simm: It certainly provides greater opportunity for those kind of deals to happen, but those kind of deals happen normally when the media vendor or supplier has an issue to be solved or an area in which an investment can pay off for an advertiser, where there is a potential pay off in the deal.

Looking at media opportunities, straight media opportunities globally, such deals may indeed come up, and advertisers and their worldwide media providers will be able to take advantage of them.

Mr. Jacobs: I don't know whether this is the same in America, but I've been enormously impressed by the work that Turner does in proposing their creative marketing solutions to advertisers, and I think that's the sort of thing you're going to see more and more.

AA: What have they done that seems special to you?

Mr. Jacobs: Over here, the Time Warner and Turner sales forces speak to each other, they swap notes and information and so on and I'm sure that's the sort of thing you're going to see.

Rather than just saying, "Tell you what, if you buy ads on my station I'll give you a price of X," the discussion will be "Here's a deal whereby we can leverage our brand as a television station and our strength in the market in A, B and C, with your brand of whatever it happens to be and together we can do something brilliant."

That's the sort of thing I think's going to happen more and more, and I wish Steve Heyer [president-chief operating officer, Turner Broadcasting Systems] and his boys all the luck because they seem to be the ones doing it, they seem to be the cutting edge of it.

Ms. Pool: Just like our end of the business is changing, so is theirs. The providers sell advertising time. The producers produce shows for the advertisers. . . It could switch; it could change.

What about the advertiser getting involved with some of these powerhouse studios? What if an advertiser got involved on the ground floor with a producer, with a minute of commercial time? This type of relationship could help make sure that a producer got a clearance on a network.

Mr. Gotlieb: On the synergy question, the critical piece has literally been the vendor trying to unload the property that he can't otherwise sell, versus those on our side trying to get a lower cost.

As we move forward, particularly in the area of television, the biggest challenge we all have in this more fragmented context that we're heading into -- and it's really going to be a worldwide fragmented context -- is to position the advertiser-supported portion of television vis-a-vis pay-per-view and that kind of stuff.

As we go forward, the point that Brian touched on will become critical. These deals will happen as broad partnerships as opposed to two entities with two totally different sets of objectives knocking heads against each other.

If television is going to be a strong advertising medium a couple of decades down the road, we all have some work to do, both on the broadcaster side and on the advertiser and agency side, and there may be some room for some long- term and broad partnership arrangements as time goes on. There could be some significant payoffs for all of us there.

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