As Irwin Gotlieb, president-CEO of New York-based TeleVest says, "Clout is a wonderful thing-if you know what do to with it."
No doubt Mr. Gotlieb does: Last year, TeleVest, the media-buying unit of MacManus Group, was the largest buyer of both national network TV and syndication advertising time, spending well over $1 billion on those purchases.
But TeleVest has been eclipsed by the recent alliance of two WPP Group shops, J. Walter Thompson Co. and Ogilvy & Mather Worldwide, both New York. That combination totals more than $1.8 billion of ad time on national network TV alone.
Last month's announcement of the JWT/O&M alliance confirmed a prediction Arnold Semsky, exec VP-director of media and programming services, BBDO Worldwide, New York, made in Advertising Age last summer: Media consolidations are in vogue.
"As I said [last year], bigger is better," Mr. Semsky says. "You get the best prices."
INFORMATION THE KEY
Just as importantly, he says, you get access to the best information. "And information, if you know what do to with it, is key," he explains.
One only need look at the U.S. operations of Cordiant's Zenith Media unit, New York, to see how highly clout is valued.
Although Cordiant is planning to "demerge" into its two main shops, Bates Worldwide and Saatchi & Saatchi Advertising Worldwide, both New York agencies will partly own-and keep business in-Zenith.
Part of the reason agencies are more obsessed with clout has to do with the American landing of Carat International last year.
"Agencies are very cognizant of the havoc Carat caused their media businesses overseas, particularly in Europe," says one media executive at a major shop. "In Europe, Carat has played the clout card to perfection."
A good portion of what Carat has to offer outside the U.S. is in research and systems. That's a point recognized by sophisticated U.S. media managers.
MORE TO SUCCESS THAN CLOUT
"A lot of people think clout comes down to how much money you have and what's your cost per thousand [viewers] and how do you push the close of the deal," says Mr. Gotlieb. "But that's only the tip of the iceberg. The bulk of the work is how well you translate your client's objectives to actual buys. And the tools you have to do that, the systems, as well as the people you have, become very, very critical to that."
But some question how many agencies actually do, or intend to, devote a lot of resources to research and systems.
"Agency margins aren't overwhelming," says one cable network chief of advertising sales. "Anything they can do to reduce expenses and raise their profitability, they are going to look at carefully. Some of it will be wrapped in client service, and some will look at what their internal economics are and what they need to do to make them better. But will they actually spend money to do serious research and the like? That's doubtful."
COSTS HELD DOWN
"Too often the spin put out on a [media] consolidation is that it's for increased clout. What gets lost is that it's really a cost-savings move," says a top media executive at a large agency. "What you really need to make clout work is investment in media, so the clout means something for the clients."
This media executive is one among several who wonders, for example, about the real intent of the JWT/O&M alliance.
"With both agencies careful to say that so much of what they do is still separate, I'm unclear as to what it will accomplish," he says.
"It's an experiment," counters an insider at one of the WPP agencies. "It brings a lot of buying power in front of the networks. If it works and the clients are happy, I think you'll see further integration between the two agencies on a meaningful level."
NOT JUST MONEY
Gene DeWitt, president-CEO of New York-based media-buying service DeWitt Media-and a former major-agency executive who's controlled massive media budgets-vehemently disagrees with the idea that the power of hundreds of millions of dollars is significant.
"It's a false God," he says. "It's a sham. These guys who proclaim clout don't really negotiate with the networks. They make `agency deals,' and then the networks buy the programs for them. Then they go back to their clients and say, `Yes, I got you a few "Seinfelds," but we had to take some other stuff, but don't worry, it's guaranteed.' I say it's not the size of your budget, it's the size of your brain that counts."
Indeed, as the TV audience further splinters and the combined rating of the biggest TV medium, network TV, continues to slip, some observers question the value of clout.
"I wonder about the benefits of clout in an increasingly fractionalized universe. If your budget is such that you've got to spend it in a million different places, I wonder how beneficial clout becomes?" asks a agency media executive.
Those who acknowledge the strength of clout counter this argument with two major points.
First, they say, even though the TV audience is more fragmented, there are still a very limited number of vehicles-most notably network TV and certain cable offerings, such as National Football League games-with large audiences. Clout gives extra leverage in getting at these larger audiences.
ALREADY IN CABLE
The second point, more subtle but equally compelling, is that many major spenders on network TV already are in cable. As a result, clout will continue to make a difference because spending won't get more fractionalized, when comparing outlays in one TV medium to that in another.
In fact, last year six of the top 10 network TV spenders-including five of the top six-ranked among the top 10 spenders on cable networks (see charts on Pages S-16 and S-19).
"The big spenders are already spending in cable, and I just don't see them shifting a lot of their budgets from network to cable," says a top media-buying executive. "They're already spending a lot on cable."