Best Buy Expands Media Role

Best Buy, the Minneapolis-based retailer of electronics and appliances, is now selling something new: media planning and buying services for advertising agencies.
Two years ago, the discounter said it would begin offering media buying services directly to other marketers, and its 40-person media buying department now handles about 30 outside media buying projects a year, with clients ranging from noncompeting retailers to restaurants, said Best Buy media director John McGuigan. It now places approximately $25-30 million in media buys annually for other companies.
But Best Buy now plans to “ratchet it up more and talk with agencies,” McGuigan said.
Best Buy is currently partnering with Minneapolis agency Valentine-McCormick-Ligibel to pitch the $9 million Minnesota Lottery account. The duo, with Best Buy as media buyer, is among the finalists for the business. Incumbent Carmichael Lynch, Minneapolis, has opted not to defend.
Best Buy, which also handles its creative development in-house, will begin talking to small and midsized agencies that might not have or want large media buying staffs, McGuigan said.
“There’s lots of [potential] business out there from medium-sized agencies,” he said. By virtue of its media buying clout and expertise, Best Buy can potentially offer agencies better rates than traditional media buying services, McGuigan said.
McGuigan said Best Buy handles such projects on a sliding-scale fee basis, but declined to detail how compensation might be arranged with agencies. The company hopes to double the volume of media placements for outside companies in the next few years, McGuigan said, while keeping the number of annual projects at about 30.
The company spent $170 million on media advertising last year, according to Competitive Media Reporting. It operates 289 stores in 32 states, although McGuigan said its media buys for other companies are not limited to Best Buy markets.