As More Media Shops Sign Competing Accounts, Few Clients Complain
The adage two's company, three's a crowd no longer seems to hold much weight in today's media buying arena. Now the operative phrase is: the more, the merrier. Consider an exchange that occurred during a recent meeting between executives of The Media Edge, the media buying arm of Young & Rubicam, and representatives of Monsanto, its client. At one point, a member of the Monsanto team asked whether Y&R still handled media buying for Glaxo-Wellcome.
There was a pause before a member of The Media Edge side replied positively.
Rather than be dismayed--Glaxo is one of Monsanto's biggest competitors--the revelation cheered the client representatives. "Oh, great!" said one enthusiastically. Glaxo's presence on the account roster was regarded as a seal of approval.
Only a few years ago, however, such an exchange would have been unthinkable. Anheuser-Busch ended its 79-year-old relationship with D'Arcy Masius Benton & Bowels four years ago after the agency's media arm, TeleVest, accepted a media buying assignment for Kraft General Foods. The reason? The deal included buys for A-B's competitor, Miller Brewing.
Today, the frenzy of consolidation on all fronts--among ad agencies, their clients and media agencies--has made such conflicts of interest commonplace. And clients have had little choice but to grin and bear it. With the top 10 media players negotiating for about 75 percent of all U.S. billings, media has become a giant's game and the handling of the resulting conflicts requires deft maneuvering. Because they benefit from the negotiating muscle of top media agencies--and partly because they have no choice but to work with the few proven buyers--clients are nodding yes to old no-nos (see chart).
During Ameritech Corp.'s $100 million media AOR review last year, for example, a letter was sent to potential media candidates by consultant Morgan, Anderson & Co., New York, stating that it would not be a problem if one of the pitching companies' offices "works in the media area for another telecommunications company," as long as no sharing of proprietary information occurred. Ameritech had no choice, really: telecom deregulation has gone so far that finding conflict-free media shops has become difficult. Ameritech eventually parked its account with Carat ICG in Chicago, ignoring the fact that Carat MBS in New York handles MCI's local broadcast work.
Consultant Arthur Anderson, who conducted the Ameritech review, described the process as "laborious." Not only was it apparent that many of the large traditional media companies were seriously conflicted, but the search itself required a careful inspection of what each of the candidates, many of which already had telecom clients, had to offer, office by office, market by market. What eventually clinched the deal for Carat was the fact that it has other offices which could step in if a situational conflict arose, he said.
At a time when nothing counts more than the bottom line, clients have decided that negotiating clout is more important than an exclusive relationship. Late this spring, The Media Edge won Royal Caribbean Cruises's $40 million media buying account, even though Y&R's Chicago office has been handling creative work and media planning and buying for rival Norwegian Cruise Line since last year. "I'm more concerned with The Media Edge's expertise in media buying" than with anything else, explained Nina Cohen, vice president of marketing for Norwegian Cruise Line.
Executives at The Media Edge claim its large size insures competing clients are protected against outright conflicts. Separate teams handle competitive business, for example, while each account is password protected and buyers on competitive accounts do not share information.
Daryl Simm, the newly appointed chief executive officer of worldwide media operations for the Omnicom Group and president of Omnicom's Optimium Media Direction (the OMD Group), insists that competitive conflicts should not be a client's first consideration. "Is the objective to beat the competition or to win with your consumers?" he asked. Simm, who was formerly director of media and vice president and general manager of Procter & Gamble's programming business, takes the second view.
Media executives maintain that sometimes 1+1=3. Case in point: TeleVest's handling of two rival coffee brands. TeleVest, which handles the consolidated media buying for all P&G products, including Folgers Coffee, also handles buying for Maxwell House Coffees. While the brands are handled by two distinct groups, according to insiders, buys for the fiercely competitive coffee brands are negotiated together to achieve economies of scale. Buyers pool each brand's billings, without disclosing to the TV network the brand name, and thus can extract better terms from the seller.
Traditionally, conflict rules for media accounts have been less rigorous than creative work, partly because media was seen as less strategic and buying was typically done out of house. But as more media companies seek to become strategic partners for clients--handling planning in addition to buying--substantive conflicts will become more of a sore point. "As you see more and more convergence of resources at agencies, media strategy becomes very important and could become sticky," said Anderson.
And as media agencies continue to consolidate and offer more planning and research, the potential for conflicts of interest will grow. Western International Media, Los Angeles, for instance, was established on media buying commissioned by agencies that retained creative and planning responsibilities. For years, Western's rivals have complained that it held conflicting accounts in the supermarket, fast food and broadcast arenas. The company handles media buying for both Vons Markets and Ralph's Food Stores and planning and buying for fast-food competitors Carl Jr.'s and Long John Silver's restaurants.
Western managers have responded to competitors' and clients' concerns by insisting that the company--with 2,000 employees and 40 offices--was large enough to segregate conflicting accounts. "Our Chinese walls are made of brick," said Mike Kassan, Western's president and chief operating officer. In his words, "there are no conflicts, only ironies" between competing clients.
Western has sometimes pushed that logic to the limit. The company itself could not pitch the Royal Caribbean business, since it conflicted with client Disney's own cruise line; Disney has made it clear in the past it will not not tolerate any conflicts. But Western promptly dispatched an affiliated agency, Media Partnership of Norwalk, Conn., to fight for the new business. Royal Caribbean's consultant acknowledged that issues of conflict were "broached," and Western assured the client that it had appropriate safeguards in place.
But sources say that Western discretely aided sister Interpublic companies Ammirati Puris Lintas and TMP in their Ameritech pitch despite Western's AOR status with BellSouth, which has strict rules on conflicts. Kassan confirmed the collaboration, but insisted Western broke no confidences.
As Western itself pursues direct business from clients and builds up its in-house planning department, such "ironies" cannot help but look more like outright conflicts, believes Herb Zeltner, a longtime consultant who works exclusively with Western and Interpublic, its parent company. The best solution, he maintains, is for companies to create separate units to handle competing clients. McCann-Erickson's decision to establish a distinct unit to buy media for client Coca-Cola is a step in that direction, he said.
Another solution is to create separate networks as agency holding companies have long done. It is rumored that TN Media is moving to purchase one or more media companies in order to create a second media network. TN Media, which grew significantly following the merger of True North's Foote, Cone & Belding and Bozell's BJK&E's media departments, has plenty of potential conflicts to iron out. TN Media chief Mike Drexler declined to comment.
Yet some observers insist that there's no guarantee that proprietary information will not end up being exchanged between competing accounts at the same agency. "It is a disturbing trend to have more and more clients look the other way," said Lee Doyle, co-media director at APL. "A different name on the door doesn't necessarily mean there is true separation between the strategic and media buying group." The best advice might be another old adage: Caveat Emptor.
Full House: Media agencies serving competing clients
Young & Rubicam :
Y&R Chicago: Norwegian Cruise Line, $10-15 million
The Media Edge: Royal Caribbean Cruises, $40 million
Carat North America:
Carat MBS New York: MCI local radio and TV, amount unknown
Carat ICG Chicago: Ameritech $100 million AOR
TeleVest, New York:
Folgers Coffee (Procter & Gamble), $66 million
Maxwell House Coffees (Kraft), $80 million
Western International Media, Los Angeles:
Vons Markets, $23 million
Ralph's Food Stores, $19 million
Carl Jr.'s Restaurants, $28 million
Long John Silver's Restaurants, $27 million