In an effort to gain better control over the TV ad- buying process, advertisers are hiring auditors to probe every facet of how their agencies buy ads—not just the prices they pay, but whether they got what they paid for.
As a result, advertisers are discovering that there are significant disparities in the marketplace, in terms of both pricing and the quality of the TV-advertising schedules they purchase. In some cases, they reconsider whether they should be buying time on various networks at all. And contrary to conventional wisdom, it's not necessarily the biggest players that are getting the best deals.
The conclusion: The prices paid by ad agencies for comparable TV-ad schedules can vary by 25%, according to John Billett, founder of London-based Billetts, which audits the quality of media buys for big advertisers, and co-founder of U.S.-based Media Performance Monitoring America (MPMA), which has been hired by the likes of Ford, KFC and Unilever to do the same.
“That is huge,” Billetts says.
But the most startling finding isn't that there's a huge range in pricing. It's who is getting the best deals. “It's not the biggest agencies,” Billett points out. “It's the ones that are most nimble.”
The findings suggest that the rationale used by big agency-holding companies to consolidate media buys may be a myth. Instead of getting better deals, they may actually be paying more than smaller agencies that move faster and aren't worried about getting massive TV-advertising budgets placed during fast-paced markets like the upfronts. Billett says his audits have found that the best deals go to the buyers that have the best strategies and “negotiating skills.”
These auditors are having a profound impact on the way media agencies buy TV time—and the way networks sell it. Unlike so-called “compliance” auditors, which make sure that media buys actually run as scheduled, companies like Billetts, MPMA and Media IQ monitor the quality of those buys to make sure that they're the right ads for the right audiences and are placed in the best positions possible.
That means ensuring that ads don't run in cluttered commercial pods and that they get a fair number of “A” positions (the first commercials in a group). The reason: Ads appearing in the first commercial position are more likely to be seen and remembered than ads appearing later in the break.
By closely monitoring how networks treat their advertisers, auditing firms have established benchmarks that can be used by agencies to negotiate better ad positions for their clients.
After being audited by New York-based firm Media IQ, one of the largest media-buying shops recently sent letters to all the major national TV outlets, putting them on notice that they need to make sure they not only deliver the best prices but adhere to the quality controls monitored by Media IQ as well—including cost per thousand, the mix of commercials in the advertiser's schedule, and the percentage of A positions given.
Each month, Media IQ provides the agency with a report card that indicates how each network treats its clients.
A Media IQ analysis of 2003-04 season data shows a tremendous disparity between networks. Among other things, Media IQ found that Spike (3.5 commercials), The Weather Channel (3.6) and Headline News (3.8) had far fewer commercials per break than BET (7.8), TNT (8.2) and VH1 (9.1).
“The agencies are being asked to live up to a higher standard, and they're asking the networks to live up to it, too,” says Media IQ founder and CEO Michael Lotito. “They're stewarding their buys more carefully, because they now have independent benchmarks to do it.”