Buying time in bad times
By Steve McClellan -- Broadcasting & Cable, 11/18/2001 7:00:00 PM
If you sell TV advertising for a living and don't know Bill Cella, make a lunch date with him ASAP. Why? Because he runs Magna Global, whose nearly 100 clients account for roughly a quarter of all the money spent on national television advertising.
The Interpublic Group of Companies, the ad-agency holding company, created Magna Global last summer to represent its two big media-buying services (Universal McCann and Initiative Media) at the negotiating table with the TV networks. Cella is now meshing the buying-service systems with Magna. Top clients include General Motors, Nestlé, Unilever, Johnson & Johnson, and Coca-Cola, which combined spend more than $5 billion a year on advertising. In an uncertain economy, his marketplace views are magnified.
In this edited interview, Cella explains why he believes bigger is better, why the upfront buying process needs to change, and much more.
The economy and the ad market had been on a downward spiral, and then the Sept. 11 attack happened. What's the long-term damage to the ad marketplace?
It's not really sorted out yet. I think the whole economy is trying to find itself. It's still struggling. But interestingly, the broadcast economy has shown some steady movement in the fourth quarter. There's money coming in. It hasn't been gangbusters, but it's been steady.
Better than expected?
It's been better than the networks anticipated. I think they were surprised that it didn't just fall apart. There's still a ways to go, but it's a positive sign that advertisers want to get their names out there and keep strengthening their brand in this environment.
Has Sept. 11 changed your business at all, short term or long term?
I think that categories are being affected: obviously, the airline category and probably the resort businesses and related categories. But I don't think it's going to be a drastic change. I think it's going to get back to normal once we get out of the questioning period of what's going to happen with the retaliation.
This year's upfront was a buyer's market. How steep were the price cuts?
Everybody was very affordable, although, in my heart of hearts, it wasn't steep enough. But there were significant rollbacks.
More price cuts next year?
There's always room for improvement in that regard. I think 2000 was the straw that broke the camel's back when ratings were down pretty much across the board and the increases were still huge. I mean, that was ridiculous. If we were paying increases of 15% and the ratings were down 9%, it's an increase of 24%. It was just excessive.
That $1 billion that seemed to disappear from the upfront TV marketplace—where did it go?
I think the money was thrown back into the bottom line. And I think the reduced spending was much deeper than anybody anticipated.
So it's gone?
Well, I think it's gone. I think that now, with the tragedy we've gone through in the past two months, it's even more of a challenge to generate revenue. But it's a great opportunity, frankly, when things settle down, to increase market share if your competitor is not really out there spending money. So there's a good opportunity for advertisers to increase their share of voice at this point.
Does the upfront process make sense?
It really doesn't make any sense, actually. In all honesty, it's an absurdity because what happens is that we go to market after the upfront presentations at the end of May. And we go to market with money that we really don't have a strong handle on. It's money that we anticipate clients will spend. The client planning process is usually June to August for the following year. But the money we go to market with is really not hard, firm dollars. It's guesstimates. So the reality is that it probably should be happening on a calendar-year basis.
This year's upfront was slower than usual. Did that work in your favor?
Yes. In 2000, we had an upfront fuse that was three days. It was absurd. $8 billion spent in three days is ridiculous. You really can't do justice for your clients; you can't evaluate programming.
Magna will spend about $8.6 billion a year on national TV ads, or about 25% of that market. How do you hope that clout will translate to your clients?
I think that one of the important things, with all the information that we're going to have through our agencies on different sectors of the economy, is not only a lot of leverage with dollars but the opportunity to create real partnerships with networks. They can come to us, and we can look at opportunities they may have for programs that may be hard for them to sell.
Networks can come to us for one-stop shopping, because we have so many different clients within our agency systems. One of the big things, really, is that we're going to have a great purview of the marketplace because of our oversight in so many categories.
So we're going to have almost a macro-economic view of what goes on in the media marketplace and also kind of an econometric view of what is going on in the overall economy. So the intelligence gathering that we're going to be having, the data we're going to have, is really key.
Not too long after Magna was announced, the company lost the Pepsi account, leaving you with Pepsi's main rival Coca-Cola. How have you responded to other clients who might be concerned about conflicts of interest?
Pepsi's leaving had nothing to do with Magna. That had to do with conflicts at the agency level, not with the way we've structured the media buying.
But aside from that, basically, my clients are Universal McCann and Initiative Media. The people who oversee the buying groups at those agencies deal directly with the advertiser clients. They deal with the client strategies, individual budgets, the client's needs for specific programming, GRP levels, added value and so forth. I don't know about that stuff. I don't know anything about any client's particulars.
You don't need to know that to negotiate the prices?
No. I just know aggregated dollars that are rolled up by the agencies, for instance, by daypart.
I'll see the Universal McCann rolled-up dollars for daytime along with the Initiative Media dollars for daytime. We'll take those total dollars, go to the networks and do deals for daytime.
You've told sellers that Magna is more than just about negotiating price. They're still not clear on your mission. Can you clarify?
Right now, the major focus is the upfront. The individual agencies will do their own scatter until we develop a system that is user-friendly for the networks.
What about sports?
We are looking at Olympics. We'll probably look at high-ticket items for both sports and entertainment like the NFL and the Super Bowl and maybe the Academy Awards and things like that.
There are some issues, but they're pretty much systems issues: who contributes what at different agencies and how we make the process user-friendly for the networks. That will be worked out by the next upfront.
I think there's a big application for scatter. The problem with scatter is the differing needs of clients, weeks when they buy; it's a little more complicated in scatter. So that will be a determination we make as we go along.
How about cross-media deals?
Eventually, I think, Magna will be the ultimate cross-media environment. But we don't represent print, outdoor or radio yet, so it's not something we'll be doing immediately. But we will. Cross-media is important, and it's only going to grow as the years go on.
What's the advantage to having all this marketing data from your client base?
When you have information, you can really get a better feel for what you think the market's going to be. For this year's upfront, we—meaning Universal McCann and Initiative—shared for the first time non-proprietary information. So I had meetings with the people at Initiative and the Universal McCann Group, and we discussed what we thought the marketplace was going to be like by daypart, by network and so forth.
And it was fascinating. We'd never done it before, because the two agencies were competitors. But now we're part of this new thing.
And what did you glean from those meetings?
We had a pretty good picture of what was happening in the marketplace and how bad it was going to be. So we think, this year, we had more intelligence on the marketplace than the networks did initially.
That's one of the reasons why the network upfront was a little bit draggy, because the networks didn't believe that the market was as down as it was. We saw it.
Are the networks reaching out to the agency community more now than in the past to get feedback on programming development?
I think they are. Since it started 11 months ago, our programming department here at Universal McCann has put 10 hours of prime time programming on the air, including our first series, Lost.
You mean programming in terms of client-sponsored programming?
Yes. We don't own the show, and our clients don't own it. But the clients sponsor it exclusively and help fund it.
How does that benefit them?
It's really about giving advertisers a higher visibility in the market when they can get involved in exclusive products, where they can have special billboards, special bumpers. They can have product placement done in a nice way. So it's something that we're very high on here. I'm very pleased the way it's worked out.
So you'll do more of that as time goes on?
Oh yeah. We're looking at 22 projects right now for 2002.
You mentioned product placement. How important is that?
It's important to be able to show your brand, the actual brand on-air, where it's done as a natural integration into a program. Clients are realizing that not only do they need their commercials to sell their product but they can have an actual visual of their brand in an environment that makes sense and that's reaching their target consumers. That's another hit for them. So it's becoming more and more prevalent.
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