Muddle in Media and Agencies Shoot Themselves in the Compensation Foot - Gene DeWitt - MediabizBlogger

A million trainees tapping on a million keyboards is not the way to manage media.

The Delaney Report's March 10 Issue leads off with the headline "Media Muddle" and then goes on to discuss the challenges that media agencies and their holding companies are facing in trying to maintain profitability in the face of client pressures on compensation and the need to serve clients on an increasing number of media platforms. (To see this issue, please download the PDF file at the bottom of this post.)

Although my professional goals at this time are to serve on relevant boards and advisory panels, I did last year undertake to manage the media service for New York Life Insurance. In the course of this experience, I oversaw the placement of a few dozen million dollars in all media. What astounded me was how 'manual' and unwieldy much of media buying still is. In fact, some of the transaction processes haven't improved very much in decades, a period when virtually all other industries have achieved huge productivity gains via technology.

Mike Lotito of Media IQ is quoted as saying that "Media agencies need to invest in technology and stop hiring 50 people when they win a new piece of business." I know Mike and have no doubt that his observation is accurate.

This is confirmed for me by a recent college graduate whom I helped to place in an entry level position in the network department of one of the mega media agencies. His job consists of endless and mindless hours of rekeying TV buy data into the Donovan Data System, itself one of the dinosaurs of the business (I should know; my experience predates DDS).

In the late 1960's when I was a media planner at the then fledgling agency Ogilvy & Mather, I learned that the financial department had hired a computer programmer to develop software for them. At the time one of my assignments on the Instant Maxwell House Coffee brand was an annual media analysis that consumed six "person weeks" of time at the beginning of very planning year. I taught myself a computer language called "Basic" and then collaborated with O&M's computer programmer, Hal Samuels, to develop something we labeled NASTEA for Network And Spot Television Expenditure Allocation. The resulting software completed the analysis overnight, on punch cards.

When I launched DeWitt Media in the early 1980's it was on the back of the 'new' IBM PC and a spreadsheet program called Visicalc. I figured that with these new developments I could do the work of 200 agency media people with 20 people trained to work with this technology. I did and it worked. Because ad agencies at the time had no interest in investing any money in their media departments, we thrived and eventually came to compete effectively with the biggest of them.

Now it appears that these media agency behemoths have lost sight of the necessity for businesses not only to grow revenue but also to increase productivity constantly. Perhaps this is because so many media agency leaders are former network television buyers and who therefore have never run a business as complex as a media agency.

Whatever the reason, it is clear that the media agency industry requires a major productivity initiative to provide clients with the services they want at prices advertisers are willing to pay. One side of this coin is of course to increase the perceived value of media agency services that are commodities and perceived as such. Another imperative however is to harness the latest technologies to enable media agency work to be done in a far more efficient and timely manner.

Perhaps then the agencies can find time to train their junior people and to empower them to use their intellect on behalf of the agencies and their clients rather than fritter ways years of their lives and billions of brain cells rekeying data.

Download delaney_report_31008.pdf