Client Treads On Media Buyers’ Turf

Best Buy’s In-House Unit Pitching Business With Agency Partner
CHICAGO–Best Buy, the retail electronics and appliances chain, is now selling something else: media planning and buying services for ad agencies.
The Minneapolis discounter has a 40-person media buying department that handles about $25-30 million in buys for outside clients annually, ranging from non-competing retailers to restaurants, said Best Buy media director John McGuigan. Its 30-client list includes Color Tile, Black-eyed Pea Restaurants and Toshiba, for which Best Buy handled a product launch.
Best Buy is now pitching the $9 million Minnesota Lottery account in tandem with Minneapolis shop Valentine-McCormick-Ligibel. The duo, with Best Buy functioning as the media planner and buyer, and VML as the creative provider, is among the finalists for the business. Incumbent Carmichael Lynch has opted not to defend.
The move potentially opens another front in the assault on turf that agencies previously considered their own. Branding experts, management consultancies and Hollywood talent agencies have all made inroads in recent years, with clients seeking a variety of creative and strategic resources.
Best Buy began offering media and buying services directly to other marketers two years ago. Now the firm plans to “ratchet it up more” and position itself as a resource for agencies and clients, McGuigan said. Best Buy, which also handles its own creative duties, is talking to small and midsize agencies that might not have or want large media staffs, McGuigan said.
The company says it can leverage its expertise and potentially offer agencies better rates than traditional media buying services, because of the volume it handles for itself. Best Buy places all its own media buys; it spent $170 million last year, per Competitive Media Reporting. The company operates 289 stores in 32 states. Buys for other clients are not limited to those markets.
“We’re a strong team that has daily contact with the media and has excess capacity to be tapped,” said McGuigan. “Our track record is good in getting our rates for [our] clients.”
Media executives are not so sure. “Over a decade ago, many buying services competed just on [low] rates,” said Art Kennedy, executive vice president of Carat MBS in New York. “Now negotiating ability is just the point of entry.” Strategic thinking and research are among the variables on which clients also judge buyers, he said.
Best Buy, which uses sliding-scale fees, wants to double its volume of buys for other firms, McGuigan said, while keeping the number of annual projects at about 30.
–with Cristina Merrill