On the HorizonIndependent media shop revs up to take on the big boys 12/05/2004 07:00:00 PM Eastern
The world of media buying is dominated by conglomerates. Major players like Omnicom’s OMD, WPP’s MindShare and Interpublic’s Initiative Media are all controlled by multinational concerns. But among giants, there is one big independent standing: Horizon Media.
In Wall Street parlance, Horizon is the biggest “pure play”: Media buying is all it does. And that’s what some in the industry say gives it its edge.
“There’s no one else like them,” says Mike Lotito, CEO of Media IQ, a company that monitors the performance of media agencies for big marketers.
That distinction means Horizon can compete with industry giants but can offer something they can’t: the aura of neutrality many marketers demand. Clients don’t get lost in a mega-shop, so their media plans aren’t tainted by any in-house sister-agency bias, creative or financial. (For example, if Leo Burnett comes up with a great 30-second spot for Procter & Gamble, Starcom MediaVest has to develop a TV plan around it.) And the positioning works: Horizon pegs its latest media billings at $1.1 billion.
“We like to say we’re the smallest of the largest and the largest of the smallest,” says Horizon Media President and CEO Bill Koenigsberg, who formed the company in the late 1980s.
But that strength has a downside: Horizon is often pigeon-holed as strictly a spot-buying shop. It’s true the company is more agile than bigger agencies, says Steve Fajen, managing director of Morgan Anderson Consultants, “but it’s easy to think of them simply as a spot-buying shop.” Indeed, about 50% of Horizon’s buys are for local media, mainly spot TV, radio and outdoor outlets, and the preponderance of its clients are retail-oriented.
Finding Its Niche
Today, Horizon handles media for 85 brands—including Vivendi Universal’s videogame division, Earthlink and IKEA—and 15 smaller agencies, such as The Media Kitchen. It’s also evolving an increasingly sophisticated approach to media strategy, planning and research, reinvesting in its systems and resources to strategically compete with Madison Avenue.
For instance, it opened an outpost in Amsterdam and will add a London office in 2005. Horizon is also investing heavily in original research to determine the most effective ways to use media. The agency just embarked on a proprietary study on the impact of ad clutter on the effectiveness of outdoor-media buys. And Koenigsberg says the agency has struck deals with two companies he describes as “next-generation” researchers.
But while Horizon’s emphasis on competing with the big boys keeps it aggressive, independence has its price.
“They’re kind of a strange cat. They’re not really a second-tier media service, but they’re not one of the first-tier, either,” says Fajen. “They’re somewhere in between.” However, he notes that key staffers, such as experienced network buyer Aaron Cohen, Research Director Brad Adgate and Media Director Ruby Gotlieb, strengthen the shop’s expertise.
What Horizon lacks in clout, it tries to makes up for in service.
The Rebundling Trend
“We’re competing with these global entities because of a trend I call 'rebundling,’” says Koenigsberg. While agencies have unbundled their media departments into separate companies, he says, the trend is to effectively rebundle the accounts after the fact.
A major agency holding company gets the creative and, by default, the holding company’s media unit gets the media account. “By contrast, every piece of business we get is based on the strength of our media services,” adds Koenigsberg .
To date, Horizon has focused on smaller accounts in the $5 million to $10 million range, such as Jos. A. Banks and Monro Muffler, or been hired by small creative agencies to buy their media. But now, Koenigsberg says, thanks to its added research muscle, Horizon is positioned to pitch big blue-chip accounts.
To support his belief, he cites Carat’s recent win of Procter & Gamble’s communications planning account, which he dubs “an unbelievable event in the media business.” It paves the way for other media shops unaffiliated with creative agencies to pitch and win major accounts.
While Horizon forges ahead in research and strategic planning, its reputation rests on its TV-buying history. In the 1980s, when some of the biggest independents were selling out to agency holding companies, Koenigsberg held his ground. Horizon was formed when he and Don Miller bought the shop from broadcast operator Media General and took it private.
Back then, Horizon was known as a spunky retail-heavy agency that specialized in “time-banking,” a practice in which media agencies provided cash advances to TV and radio stations in exchange for cheap ad inventory they banked and doled out to clients.
A Promising Future
But the consolidation of the station business into big, publicly held companies reduced the need for stations to get cash advances, essentially rendering the practice obsolete. At the same time, big ad agencies in Europe began unbundling their media departments to compete more directly with independent media-buying agencies.
When one of the biggest, Aegis Group’s Carat, opened up shop in the U.S., it sparked a wave of unbundling and consolidation here. The result: a handful of major independent media buying agencies, all controlled by holding companies.
The trend was a turning point for Horizon.
The void created by consolidation helped fuel its growth. Smaller retail-oriented advertisers worried about the generic approach of bigger buying agencies, and smaller full-service ad agencies looking to outsource their media buying turned to Horizon. That two-pronged approach proved a winning formula. Now the shop buys media for more TV outlets than any other media shop, including all NBC Universal broadcast and cable networks and A&E Networks.
“These are some of the smartest media marketers in the business, and we are proud they came to us to manage their media,” says Koenigsberg of his TV clients. He insists the business has enhanced this agency’s skill set: “It gives us an insider’s perspective on programming and technology developments. That’s something most media buyers never get to see.”