A-B InBev Ends an Era of In-house Media

King of Beers Outsources $1B in Buying Once Controlled by Mighty BMG

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Say goodbye to the Real Men of Genius.

Anheuser-Busch InBev's decision to outsource media-buying likely signals the end of the once-pioneering Busch Media Group. The move puts up for grabs a $1 billion-plus U.S. ad budget and closes an important chapter in marketing history. In 1992, when A-B brought its media buying and planning in-house, Ad Age characterized it as a "stunning" move that heralded a new era of marketers unbundling media from creative agencies.

Jorn Socquet, the brewer's U.S. VP-marketing, said the decision to outsource buying guarantees the brewer "will stay at the head of industry with innovative and breakthrough connection planning in a vastly changing media landscape."

Finalists in the pitch include WPP's MediaCom and Publicis Groupe's Spark, said people familiar with the matter.

Busch Media Group supporters question if an agency can beat the media rates BMG negotiated, especially for sports programming. Over the years the group was known for leveraging personal bonds with media executives to craft favorable deals that propelled the brewer to growth as it battled -- and beat -- Miller Brewing Co. for market-share dominance.

"We were one of the biggest relationship-builders in the industry, which unfortunately is something that is lost in the industry today," said Tony Ponturo, the brewer's former VP-global media and sports marketing, who left A-B in 2008 after a 26-year tenure. "I can't speak for why they are [outsourcing media] because I'm not there," he said. "I think that the proof is in the pudding."

Mr. Ponturo cited pioneering pacts the unit brokered that often included getting brand logos featured in broadcasts. The deals came as the result of a "consistent partnership and relationship" with media partners, he said. Another former A-B employee said that "while agencies also have relationships, agencies have to manage a stable of clients and not necessarily all the things they can do can benefit all clients all the time."

One industry expert said A-B InBev's move is a logical step for a post-merger management team known for maniacal financial focus. "This is the age of Brito," said Tom Pirko, president of food and beverage consultancy Bevmark, referring to CEO Carlos Brito, who has run the brewer since Brazilian-run InBev bought A-B in 2008 to form A-B InBev. "He's not looking for long-term relationships. He is looking for quick hits."

A-B InBev is betting that an agency is better suited to operate in an ever-changing and fragmented media landscape. "Now you think about instantaneous results," said Mr. Pirko, noting that "the best agencies will win out." He called the competition "almost Darwinian."

One financial advantage the brewer could seek is gaining 120-day payment terms for agency fees, as well as with media vendors, according to people familiar with the brewer. A-B InBev spent $1.56 billion on advertising in the U.S. in 2013, according to the Ad Age DataCenter.

The move to outsource buying was set in motion in 2011 when planning and research duties were given to Publicis Groupe's Starcom, which "started to put the cracks in Busch Media," said a former A-B employee. The ongoing pitch is for buying and planning.

BMG was formed in 1985 to handle network TV and radio buying at a time when marketers typically used the same agency for creative advertising and media. BMG's role was expanded to include all media duties in 1992. At the time, speculation was that other big advertisers would follow, but "they really didn't," recalled Mr. Ponturo. Still, he credited the move with helping to spawn the new era of specialty media agencies, which dominate today.

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