In a media-buying venture, two or more media agencies put their budgets together in a move aimed at getting lower tariffs from ad spaces providers (TV, press, Internet, outdoor), negotiated on larger ad volume.
Over the past six months, three firms have pooled their media buying and planning functions under one roof: two of them involving subsidiaries of international communication groups in Romania, Aegis and Publicis Groupe respectively, and a media venture that brings four local companies together under one name, Romanian Media Agency.
Media negotiating companies emerged as a natural response to providers’ selling policy, said Razvan Varabiescu, managing director of Aegis Media Central Services (AMCS). Aimed at enhancing market share, ad space providers offer preferred prices for large volumes.
The apparition of these joint ventures can be seen as a market trend as well, fueled by international companies who brought their media businesses together under certain patents, said Claudia Chirilescu, managing director of local Spoon, part of ARM.
“In crisis, teaming up in a buying pool confers stability”
The third pool that involves an international communication group is Aegis Media Central Services (AMCS) that joins the buying budgets of Tempo Media and Carat, both of them part of Aegis Media Group Romania. The pool was established in December last year when Razvan Vrabiescu (photo) forecasted 35-40 million euro budget for 2009. Meanwhile, he became client of AMCS and Bigger Group, agency that closed in March. A part of Bigger’s media clients were taken over by Tempo Media.
A premiere for Romanian market was the media pool with judicial statute established earlier this year that involved four local independent agencies: Next, Odyssey, Propaganda and Spoon. Apart from getting better prices for the ad spaces and access to large media groups, the pool should give the four agencies the opportunity to bid in pitches, head to head with large international media companies – restricted area for them until now. The four companies still remain direct competitors.
“The autonomy allows you to be more creative in the proposed media strategies. And “independent” doesn’t mean you’re alone as long as you are part of a communication group. In stormy times, association in a buying pool gives you more stability and more options in the negotiation process”, said the representative of Media Direction.
Competitive clients and “non-combat” agreements
The market continues its consolidation and in the following months new media pools could emerge. Universal McCann and Initiative are talking the creation of a Romanian version of Magna – Interpublic’s media-buying pool. The fact that Universal McCann works with Vodafone and Initiative with Orange, could never generate a conflict of interests, as Mihai Trandafir, managing director of Universal McCann commented.
“Orange and Vodafone are indeed direct competitors and Romania’s top mobile communication providers. But each client looks at its direct competitor, regardless to how large it is. Eventually, a pool’s role is to bring additional financial benefits”, said Trandafir.
The agencies partnering up under a sole aggregated marketing clout should adopt a non-combat strategy, namely no direct competition in a pitch is allowed, said Razvan Vrabiescu. “I for example, could never team up with McCann in a pool as long as we often compete in pitches and have different interests. I could pool the media buying with Tempo. Same as GroupM agencies – it would be absurd to participate in a pitch and compete with each other”.
Apart from an enhanced bargaining power and a certain stability in shaky economy conditions, the pools offer advantages in terms of costs, under certain conditions. AMCS for instance, all the buying actions of Carat and Tempo Media are joined in a sole department.
Another advantage is the rebate – the discounts offered by media agencies’ providers at year-end, according to the advertising volumes throughout the year.
The disadvantages are largely related to communication issues, said Vrabiescu. Within the client-provider communication flow emerges a new element, the buying specialist, which hardens the delivery of the message and can even fuel a “deaf fight” between the buying expert (who sides with the provider) and the account (who represents the client).
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