Editorial Advisors Forum
Doug Garnett, Atomic Direct: Let me pose a different question: Why
is this even an issue? We are in an entrepreneurial business
where market dynamics dictate the value of media time. The key
question for anyone marketing through an infomercial should
be, “Does this media pay out for me?” If not, don’t buy it. If so,
buy it. In truth, brokering has become an almost “moral” issue
within the DRTV business. In media competitions, I’ve heard,
“They buy through brokers,” whispered against competing media
agencies in the same way a mere whisper of, “He raised taxes
once,” can take out a political candidate. This accusation implies impropriety. But is there impropriety? Rarely.
Mike Medico, E&M Advertising: The major positive is this type of
consolidation can benefit those agencies that are very active
and require long-term arrangements. A major negative is that
when the media is sold from broker to broker, the rates can rise
dramatically. The value proposition of the media is greatly diminished in that there is no consistency in terms of the rate and
if it can deliver on goal.
David Savage, Cmedia: I don’t know that brokering is necessarily
expanding, as the influence is less than in years past, and that’s a
good thing. The positives for agencies include having the ability
to access additional time for a client, but the negatives include
more agencies competing for the same space, creating false demand. For stations, brokering makes it easier to sell time.
Bob Yallen, Inter/Media Advertising: Among the negatives, brokering
diminishes the integrity of the time by creating too many layers
and minimizing the value. It does create a false sense of demand,
and if you do not have a good relationship with the broker, you
may have trouble acquiring the time you need. On the other
hand, positives include the fact that you do not have to strip out
time. There are more opportunities to pick up incremental time.
Fays: The only positive I see for a sales organization for brokering
time is a network would need to staff fewer salespeople, saving
on overhead. Brokering may cause an artificial demand that
may be a short term band-aid, but over the long haul, building a
direct relationship with the client is our goal at MTVN. I do not
like the idea of a third party representing Viacom on the street
with our properties.
Hawthorne: Brokers do create an artificial demand on inventory
that results in higher rates. The time is not being purchased
based on specific client campaign goals, but on speculation that
some agency or buying service will need time and will be willing
to pay a broker’s rate and, quite often, an additional mark-up.
On the other hand, brokers are committing to required inventory allotments that may not be manageable for a single client
or agency. Cable networks, in particular, require specific time
blocks to be purchased for an entire month or quarter. OTOs
(one-time-only) cannot be purchased on some networks. By
selling to brokers, stations/networks are being sheltered from the
constant rate reduction negotiations and turning back of time.
Medved: Brokers have been an integral part of this business since
the early 1980s. Debate has centered on brokering being a necessary evil, with those in favor citing the liquidity brokering provides, while those opposed stating they simply inflate rates. Brokering serves a purpose if the time being sold off was originally
purchased by an agency for the use of its client base. In this case,
an agency is relieving its clients of time they cannot use, and
getting the time to another agency through a broker. Unnecessary inflation occurs when brokers are bidding and speculating
for time on the front end.
Are there media buying agencies actually playing both sides of
the fence and serving as media brokers as well? If so,
how is this practice viewed in the business, and
what are the benefits and/or pitfalls for media
sellers and true media buying agencies?
Eden: As pressure builds from the
weak economy, more agencies
are entering into the brokerage world. This is making it
more widely accepted, but not
necessarily viewed positively.
The motive is self-serving
— to maintain revenue.
However, this practice has a
negative impact as the supply chain has an increased
number of hands in the pie
and the ultimate loser is the
Garnett: The largest media buyers use
“moral” argument to try to block out
smaller competition. They get away with it
because only the large buyers can afford to take
the risk of locking up huge sections of media time. But
if we knew the truth, we would find that the media buyers who
speak most loudly against brokering are the ones who benefit
most from it. Anyone who locks up huge sections of time based
on big commitments also has need to dump that time when client demand won’t use it.
Hawthorne: Media buying agencies are playing both sides of the
fence. They may have lost some client base that helped hold
larger media packages on high profile cable networks. In an effort to help hold media, they have started selling their time to
other agencies, brokers and/or reps. Many agencies are more
than willing to buy “pre-owned” time from smaller companies.
However, those same agencies would avoid buying the same
time at the same rate from one of their major competitors.