America First? Not in Media Business!

Apple. Google. Amazon. Netflix. Tesla. And many more new media supplies. So often "America" is the land of great new ideas, innovations, the great lucky charm of humanity. That may be so in many cases. That's definitely not the case in the media business! Even though discussions about the legal foundations of media purchasing have been able to give a different impression in the last three or four years. After all, we learned a lot about the K2 ANA Report and the investigations about media purchasing, even former FBI employees (at K2 Intelligence) were used to prevent unpleasant effects. And they are still discussing the causes, responsibilities and consequences that arise from it. These ladies and gentlemen could have learned so easily from us Germans, and saved a lot of time and efforts. Because the source of this development is clearly in Germany – back in the early 2000s, 12 years earlier.

 

Already very early, even in the for the media world prehistoric 1990s, a competition for "better purchasing conditions" arose. Well, at that time there were still quite golden times for media resp. publishers, the margins were untouchable at a very high level. And there were many more media agencies competing for the benefit of potential customers. The fees of the media agencies were in Germany or in many European countries at a stable level of at least two, more three or sometimes even four percent. And then there were bonuses on top. The takeover of owner-managed media agencies by international groups significantly reduced their number. And the powerful, strong, proud publishers suddenly stood there like little boys wondering with big eyes that they, too, became exchangeable and increasingly hung on the drip. The Internet – that business was developed in these agencies since about 1995 - did not play a major role. The online budgets were manageable, the visions not yet pronounced. At that time, nobody could really imagine that the Internet could once replace the big, powerful and effective media. But a lot of new media and new forms of advertising were created.

 

At the same time, clever minds in media agencies noticed that more money can be made in purchasing than in sales (media planning). So the services were offered at ever lower fees, they dropped to zero to one ot two percent, depending on the skill of the agency manager. Nevertheless, yields of the agencies rose from previously approx. 15-25% to approx. 35-40%. And the CFOs in the holdings rubbed their eyes and rejoiced in life! Because they no longer had to worry so much about the sharp drop in returns in the creative agencies in the same countries.

 

In the US, the media community was still in the low blow, celebrated at Upfront meetings and is pleased about fees of about 5%. This covered the costs for a worry-free media customer care package of an advertiser. Negotiations, we heard then from our American colleagues, are rather disrespectful and something like a "third world phenomenon". By the way, until the early 2000s, US media organizations still were departments of full service agencies. In Germany, independent media agencies were spun out 10 years earlier and developed into their own profit centers.

 

In early June 2016, the Association of National Advertisers (ANA) published the report "An Independent Study of Media Transparency in the U.S.". Advertising Industry "(the report is available to us and can be demanded from us). At that time the so-called Code fo Conduct of the OWM (Organization of the Advertisers in the Markenverband) had already existed in Germany for 12 years! It was released in October 2004, and had almost the same background as the K2 ANA report. As federation recommendation for all its members naturally with previous antitrust examination, thus an official quality seal. It is therefore very surprising that in Germany since 2016, we experienced a renaissance of the transparency discussion in our trade media. All problems were more or less already solved here – but not according to the trade press.

 

Dear Americans, dear ANA, dear K2 Investigators, you have dealt with the practices of transparency in media purchasing in a very professional and detailed way. But why didn´t you just ask us Germans before? Even our English-speaking colleagues, who are closer to you linguistically, do not have the  full insights about the backgrounds, causes and consequences. Even in England, the MDs, CEOs and CFOs have long watched only what is happening in Germany, and activated it only slowly, without understanding the roots exactly. And the consequences, dear Americans, you have apparently not really understood yet as far we can imagine from what we read about it in media and social media discussions. And now you are surprised that there is increasingly a two-tier society among advertisers. That the media are exposed to a condition booster, and the variety decreases. That Brand Safety and Fake News are an increasingly important topic for the advertising impact and brand management. And that there are more and more pitches. The media business is even a business, and business is always about money and market position. And about contracts and legal bases. Have you, dear Americans, ever reflected why the media companies are divided into planning and purchasing companies? It is also about transparency and liability. Who is actually liable for what effects? And is there any damage to observe? How do you actually define and evaluate “damage” in the media business?

 

Let´s talk! We are the real insiders and know the connections. And the positions of market participants - each one is right and comprehensibly. And that's exactly what shows: It's a business! But a very complex business model! Everyone has a responsibility for his company and his interests. And his shareholders! The market has to organize the clashes in between. We help with that.

 

Always at your service ... Enzenauer Unternehmensberatung GmbH Professional Media Consulting & Solutions • me@enzenauer-consulting.de • www.enzenauer-consulting.de

 

#MediaTransparency #k2ANAReport #MediaAgencies #ANA #K2Intelligence #MediaBusiness #MediaAudit #MediaPitch #DerMediaExperte 


"Do we still need to employ a media agency?"

Again and again I get calls from advertisers asking the same question "Do we still need a media agency for our media issues?" Not too often, but more often. And they all have the same questions marks in their minds.

 

My answer is simple and straightforward: That question is legitimate, but wrong. It's not about whether you need a media agency, but what supply you need. And that means: Which parts of a media agency do you need? The thoughts of the companies are quite understandable. In the meantime, they have collected a great deal of knowledge themselves, they have created a certain infrastructure and can make and negotiate media decisions on their own.

 

Due to the loss of contact intensity with the publishers, which has been gradually developing since 2008 and has increasingly led to changes in the media management of the media as a result of the changed legal relationships, the malaise of the media and marketing managers in the advertising companies increases. And since the graph of the gross-net ratios of the media investments shows more and more clearly that the gross values, i.e. the official rate cards, only represent purely fictional values*, the Procurement frowns thoughtfully. "What contribution does the media agency make for my company? After all, I pay you a lot of money." There is no universal answer covering all individual issues. Because the communication goals and especially the internal resources are different for every company. But it is clear: There are certainly functions that can be better or simply cheaper inhouse today, and let the classic outsourcing of all media tasks appear as a relic of better times. How many functions that are, and what added value it has, depends on the individual media plan. We recommend a "Power Check" to a company that seriously considers changes in media organization and processes. We also like to do that for you. On this basis you then calculate the costs and above all the opportunity costs.

 

However, the question will arise with more and more companies. The fundamental questions arising directly or indirectly from the increasing digitization and evolution of a company in digital transformation are triggering more and more questions about the meaning of the organization and structure of media management. However, the importance of communication in companies is increasing. The setup of the channels becomes more extensive. However, management only becomes partially more complex, sometimes simpler and thus easier to substitute. If you also think about this question and seek orientation, then let's just meet and set up a first workshop. That's the first basis for the Power Check. And then we keep looking, and you decide when, how and what should be evaluated in detail. In the end there will be a clear picture and a clear number: What does it cost? What's the advantage? This will enable you to make a professional and qualified decision that will make you happy in the future. And give your personal answer to the general question.

 

* see also Opinion EMR Institute of European Media Law, Oct. 2016, p. 25: "Gross prices are less realistic than fictitious prices, based on and in relation to expected net prices. Net prices therefore depend on gross prices and can be set higher if higher expenses are expected."

Hinweis: Bitte die mit * gekennzeichneten Felder ausfüllen.