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Why Agencies Often Don't Buy What's Good for You

  |  March 15, 2002   |  Comments

Is your agency opting for inefficiency when it makes your media buys? Here's how to tell, and what to do if it is.

The cheapest media rate isn't always the cheapest media buy. Agencies have to learn that the hard way: Different types of buys with different types of sites have a significant effect on how much time and money an agency must spend to manage the campaign. When both agency and media costs are factored in, there's often a radical reordering of the buy lists.

This causes problems for advertisers. The issue comes from the fact that the buying agencies are generally compensated with one amount from their clients, no matter the time and complexity required for an individual campaign. That makes agencies loathe to participate in interesting deals -- deals often in the best interests of their clients.

Major inefficiency results. For instance, when choosing between purchasing 1 million impressions for $3,000 and purchasing 10 buys of 100,000 for $2,000, the agency will often choose the less-efficient first option. Though it might cost the client another 50 percent in media, the agency lowers its own management costs. The scenario isn't uncommon. It stems from the penny-wise, pound-foolish policies of the typical advertiser/agency compensation contract.

A media supervisor who worked for me created a 120-site campaign where he deliberately kept the number of impressions for each site very low. His theory was that over-delivery results would make for an incredibly efficient outcome. He was right, sort of. The client got incredible over-delivery from the sites, but the agency had the greatest trafficking nightmare in its history. Worse, the client then wanted all campaigns to follow that strategy -- something thwarted by an insisted agency charge for management costs.

We were able to be honest because we had a very upfront relationship. Unfortunately, many agencies don't have that kind of straight-shooting repartee with their clients. This often results in quiet, gradual guidance of campaigns away from more efficient, less popular media choices.

Here's a clue to help determine if your agency is practicing inefficiency. If your media recommendations consistently contain broad-reach sites significantly more expensive than other broad-reach media, you should probably question those decisions. If the big revenue sites, such as Yahoo, MSN, and AOL, appear too often, you have a problem.

The best approach to the problem is to open up communications between advertiser and agency. Compensation contracts are sometimes a taboo subject (enough turmoil goes into making those agreements that people don't want to wake the sleeping giant), but getting the best media rates depends on it.

It also requires people on both sides of the fence communicate between hierarchical levels. Though compensation contracts are almost always created without the help of media supervisors, or even media directors, lowly media planners are often the shock troops experiencing the conflicts. Their input should be sought -- continually.

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ABOUT THE AUTHOR

Tig Tillinghast

Tig Tillinghast helped start and run some of the industry's largest interactive divisions. He started out at Leo Burnett, joined J. Walter Thompson to run its interactive division out of San Francisco, and wound up building Anderson & Lembke's interactive group as well.

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