TRADITIONAL MEDIA BUYING ON THE ROPES: INDEPENDENT SPECIALISTS, MEGA-SOURCES, SPINOFFS HAVE EDGE FOR FUTURE

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For agency media departments, the "bridge to the 21st century" that we heard so much about in the recent presidential election is fraught with peril.

The approaching reality is that scores of traditional media buying operations will be spun off or shuttered altogether over the next few years. The "bridge" is already turning into a swaying rope bridge for large and midsize agencies, and a combination of high costs and high risks are cutting away those ropes every working day.

A surprising number of agency principals aren't sorry to see this happen. Media buying for major seven-figure advertisers has become an enormously expensive and labor-intensive agency expense. As media proliferate and audiences fragment, buying units are swamped with options and constantly changing competitive parameters. It's no longer a jungle out there; it's a nightmare.

COLOSSAL SLIPUPS

When slips occur, and inevitably they do, they now happen on a colossal scale. Witness Leo Burnett Co.'s widely reported $20 million shortfall in audience delivery last fall for McDonald's Corp., which was termed "inexcusable" by McDonald's CEO. Or consider Cordiant's Zenith Media, which reportedly received a near-failing grade from Miller Brewing Co. for shortfalls in spot TV buying, and subsequently lost the entire account.

When marketers with the class and clout of Miller and McDonald's start handing out "inexcus-ables" and pink slips for media performance, you can almost see the agency's rope bridge unraveling before your eyes.

Some of the smarter shops-particularly new agencies with a focus on creative excellence-have avoided the pitfalls of building and maintaining a media buying operation.

These innovative agencies aren't bound by tradition, and they've moved naturally and swiftly in assigning the media buying function to buying specialists. What they've really done is ensure their safe and successful passage into the 21st century by making the creation of superior ad campaigns their first priority, and making sure everyone knows it.

Make no mistake; these experienced players recognize the need for maintaining the media planning function for clients, but they've jettisoned the expense and the risk of bloated buying units. By aligning themselves with major independents or compatible agencies, they're positioned better than many larger competitors to retain and attract advertisers requiring first-rate creative and excellence in media. Like the ads say, "Smart. Very smart."

`SPINOFF' STRATEGY

Still, not every major agency shares this kind of singular philosophy and direction. Many insist on offering a menu of snazzy service options, such as retail merchandising groups, event marketing specialists and interactive planning units, that all help keep the fee meter rolling. They've discovered one new way to accommodate media is to "spin off" the media department as a rebranded, stand-alone satellite. It still serves agency clients, but it's free to pursue media-only assignments on the new-business front. It's an independent that's dependent, or a dependent that's independent, depending on your point of view. For my money, it's a little like being half-pregnant.

As a separate entity, spun-off satellite operations are vulnerable. They're out on a limb that the agency can saw off with less overall disruption and embarrassment to client operations.

Nonetheless, some media spinoffs will make it into the 21st century on their feet by attracting new sources of revenue that can be plowed back into the overall media operating budget.

Spinoffs, in their way, are becoming an odd kind of win-win arrangement for agencies as they go about trying to woo advertisers with promises of big-agency influences in buying.

A third type of operation that's building an even bigger bridge to the 21st century is what you might call the mega-source. Interpublic Group of Cos. is a leading mega-player, and it's sort of hovering over the universe like the massive saucers in the movie "Independence Day." It can offer clients everything from a large former independent (Western International) to intriguing experiments like the partnering of McCann-Erickson Worldwide and Campbell-Ewald in a spot TV juggernaut that will buy upwards of half a billion dollars in local spot TV for General Motors Corp.

INTERPUBLIC A LEADING PLAYER

For the moment, Interpublic is among the leaders with its dedicated units, its facile independents and its various agency holding companies. Interpublic will most likely be one of the big American players starting the new millennium.

Internationally, a leading counterpart to Interpublic is Carat, the European media independent that recently acquired Media Buying Services International in New York as an opening move to attract U.S.-based multinational marketers.

Carat is the key independent in Europe with 11% of the market, topping $7 billion in billings. By comparison, SFM Media Corp. is the largest U.S. independent with nearly $1 billion in billings and a well-established network of alliances throughout the free world.

By the time the ball drops in Times Square welcoming in the year 2000, mega-sources, including mergers involving major independents, will handle as much as 75% of all media buying. Viable top-50 agencies with differing strengths will also continue to merge; a wedding of Young & Rubicam and True North Communications, for example, could represent the beginnings of another formidable mega-source.

MANY AGENCIES TO EXIT

Many other agencies, large and small, will simply be out of the media buying business altogether, having transferred the buying function to specialists.

Other agencies clinging to tradition and the vestiges of the "full-service" Madison Avenue concept of long ago will be stretching to cross the bridge. And they're going to have to stretch even further than Michael Jordan does to make the final basket for Bugs Bunny and all those Looney Tunes players in "Space Jam."

If you have to stretch that far, maybe you're playing in the wrong game.

Mr. Staab is chairman of SFM Media Corp., New York.

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