Buyers Battling for $1.6 Billion

With $1.6 billion in domestic media-buying assignments up for grabs and six major advertisers looking to make decisions on those reviews by mid-April — in time to prepare for the cable and broadcast television upfronts — many agency media departments have shifted into overdrive. The competition to win these accounts is so spirited that several top broadcast buyers who usually attend the annual American Association of Advertising Agencies media conference, held last week in New Orleans, bypassed the event to concentrate on retaining or winning the large amount of available business.

Among the usual attendees who stayed home were Irwin Gotlieb, chairman and CEO of MindShare; Marc Goldstein, president of national broadcast and programming for MindShare; Tim Spengler, executive vp of broadcast for Initiative Media North America; and John Muszynski, vp and chief broadcast investment officer for Starcom.

MindShare is in the running for Motorola’s $300 million media-buying assignment, along with Initiative Media and incumbent Universal McCann. MindShare is also contending for the $250 million Sony Pictures Entertainment account, along with Zenith Media, The Media Edge and incumbent Universal McCann.

Meanwhile, Initiative Media is pitching for the $200 million Bristol-Myers Squibb media business, against MediaVest, FCB and True North’s Pervasive Media. The largest U.S. media-buying assignment currently up for grabs is the $600 million GlaxoSmithKline account, which was put into play as a result of the merger of Glaxo and SmithKline. The Media Edge is the incumbent buyer of network TV advertising for Glaxo, with MediaCom the network TV incumbent for SmithKline. Initiative, Media Direct Partners and Media Planning handle other buying roles for GlaxoSmithKline and are also participating in the reviews.

Philips Electronics has put its $600 million worldwide media account up for review, with about $100 million of the total spent in the U.S. Starcom MediaVest Group, Carat North America, MindShare, OMD and Zenith are all pitching for the Philips business. The six current high-profile media reviews follow recent decisions on the $700 million Pfizer buying assignment and the $100 million New Line Studios business, both of which were picked up by Carat North America.

Buyers say they cannot recall a period when there were so many $100 million-plus media assignments up for review at the same time. It is also highly unusual to have so much media-buying business in review so soon before network and cable TV’s annual upfront buying period, which begins in May. One buyer who requested anonymity noted that several more advertisers — each with annual U.S. spending of more than $50 million — are expected to put their media-buying responsibilities up for review before the upfront gets underway.

A major factor in the convergence of media reviews is consolidation, among both advertisers and agencies. A wave of mergers in the pharmaceuticals industry, including the Glaxo-SmithKline union, has set off a flurry of consolidation of those companies’ media-buying responsibilities. In addition, many large advertisers are taking the approach that the biggest media-buying concerns can offer them more clout. When one of the top buying agencies approaches an advertiser about a potential assignment, “it’s like Godzilla wants a meeting,” media consultant Erwin Ephron quipped at one 4As conference session.

Another reason some large advertisers are putting their media-buying responsibilities up for review is the stepped-up scrutiny they are getting from investors. “Wall Street punishes people who don’t make their earnings estimates,” said Steve Grubbs, CEO of OMD USA. “As a result, every corporation is under huge financial pressure to manage their media investments better.” Renetta McCann, CEO of Starcom North America, agreed. “Wall Street beats the crap out of a lot of businesses,” she said. “Companies that did so well with the strong economy are not doing as well, so the pressure is on to run their businesses more effectively.”

Lou Schultz, chairman of Initiative Media North America, said the stakes are greater today because most of the largest buying assignments are held by a few huge, publicly traded companies. “We all have stakeholders today,” Schultz said of the top buying firms. “Like everybody else in business, we don’t want to lose money.”

One media executive cautioned that some top firms may be placing too much emphasis on winning new business. “We tend to be very selective in what we will pitch,” said Jon Mandel, co-managing director and chief negotiating officer for MediaCom. Of the six current big-dollar reviews, MediaCom is participating only in the GlaxoSmithKline competition, as an incumbent. “At the end of the day, you have to be focused on taking care of the business you have first. It’s not fair to your current clients to miss something that might help them because you are busy chasing the pretty new girl down the street.”