Principal-Based Media Buying: That Was Then, This Is Now

Surely such a practice would never spread to the good old US of AIt seemed unlikely Ad Age published an article the following year after Carat39s French profits had been decimated by a law Loi Sapin amended after lobbying by the large agency groups to introduce transparency in media buying headlined quotEurope No Media Yardstickquot The article concluded quota system can go too farquotIt39s 2016 Ad Age last month published a long and thoughtful article on quotPrincipalbased buyingquotamp160quoting some of the companies albeit in a different guise who found the Carat method so distasteful 20odd years ago Principalbased buying may sound shiny and new but it39s broking by any other nameThe world has of course changed in 23 years But in this particular case not so much is so different Carat in France was founded by the Gross brothers who ran a furniture business They were keen radio listeners They noticed how few ads there were outside of the prime drivetime zonesThey went to the leading radio stationsamp160and offered to bulk buy the inventory the stations couldn39t sell A bit of research and a nifty bit of packaging later and Carat was in the broking game Other media forms as we all know followed Incidentally collectors of agency ephemera might like to know that Gilbert Gross was once world poker championHere39s how Ad Age describes today39s version of the old Carat practice quotPrincipalbased programmatic buying often referred to as arbitrage is already common at media agency networks39 digital buying arms and trading desks such as WPP39s Xaxis and Omnicom39s Accuen It usually requires marketers to agree to pay a bundled price and waive their right to see how much agencies originally paid for inventory and made on feesquotTo be fair there is one key difference Today marketers quotusually amp8230 waive their right to see how much agencies amp8230 paid for inventoryquotamp160In the preLoi Sapin days there was no waiving of anythingamp160if you were a Carat client you paid whatever they asked you to pay in the sure knowledge you had the best deal going After all you had the word of the exworld poker champion on that scoreThe key argument against media broking remains the same as the one used by the large agencies to bring down Carat via a law that initially had nothing to do with advertising or mediaamp160Once as an agency you39ve committed toamp160or under the principalbased scheme actually bought inventory you have to sell it If you have to sell it your objectivity goes out of the windowFor some clients this might not matter a jot As long as it39s cheap to these clients that39s all that matters These are the clients who see media as a commodity amp160and in some lines of business they may very well be right As long as it39s cheap and to take one example drives sufficient direct response who caresBut for others those who see media not as a commodity but as a valuable contributor to brand building and longterm success it matters a great dealThese are the clients the agencies aspire to handle amp160After all why else have all those strategists and plannersYou can be an objective buyer of a plan or a seller of inventory you have piledup in the garage but I struggle to see how you can be bothI fail to see how any single entity can tie a broking or arbitrage model in with objective planningI also fail to see how any client can fail to recognize the distinctionIt39s makeyourmindup time for clients Go down the cheap route and ignore any real understanding between media spend and marketing successOr pay for the thinking and the planning and buy just what you need to get the job doneImage courtesy of GraphicStock The opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated bloggers amp160amp160

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Principal-Based Media Buying: That Was Then, This Is Now

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Brian Jacobs

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