(Editor's note: In this special commentary, media industry veteran Blaise D’Sylva responds to David Smith’s November 11 column "Disarming the Ad Bomb," which was itself a response to Mike Drexler's high profile September 28 commentary about crises and challenges in the advertising business, "The Advertising Industry As We Know It Is About to Blow Up!") "Dear David Smith: I’ve wanted to write this story for a long time but wasn’t sure how to pull it off without making it seem self-serving, defensive or disparaging," D'Sylva writes. "But your recent column on MediaVillage, 'Disarming the Ad Bomb: Part 1,' finally prompted me to respond ..."
In your article you stated, “Last year, Anheuser-Busch InBev decided to outsource media buying, bringing about an end to the Busch Media Group (BMG). The fact that one of the biggest advertisers with the most resources could not make in-house buying work is a prime example of the resources and experience media buyers bring to the table. They apparently realized media buying wasn’t all about deal making. It is a complex landscape and if you don’t know how to navigate the terrain you will lose.”
As background, I had the privilege of being the last person to run BMG, AB InBev’s in-house media and sports sponsorship group that was dissolved at the end of last year. (Technically, I wasn’t the last person to head up BMG, but for all intent and purposes I was as the last leader was just a caretaker to dismantle the group.)
So what’s my message? BMG was a tremendous advantage for the company that was ahead of its time, continued to evolve over time and could’ve continued to be for a long time to come. BMG delivered financial benefits, tangible added value benefits, and streamlined work processes and communication that an external media agency could only dream of.
I want to call out the extraordinary vision by the late Chuck Fruit to create BMG in the late 80’s and early 90’s. At that time, before the rise of media departments spinning off into independent media agencies, he had the foresight to understand the importance of media within marketing and determined he could build an internal team of not only media experts but beer industry experts that could service both the complex web of internal constituents (wholesalers, regional sales and marketing personnel and the marketing organization) and the growing list of media, sports and entertainment partners.
Even back then, Chuck recognized that media is about far more than efficient buying (and now more than ever). And as you so enthusiastically call out, it requires strategic partnerships that are mutually beneficial. This is another reason why BMG was so brilliant. There is no one who cares more about the strategic direction of an organization, the results of their work or who have a desire to take things to the next level than people who actually work at the company. Talk about everyone wanting a "win-win" partnership; this translated at both the national and local levels across all functions and disciplines.
And that vision paid off for two decades after Chuck left for Coca-Cola through the strategy and execution delivered by Tony Ponturo, Peter McLoughlin and Mark Wright, who developed BMG into one of the industry’s most respected media agencies, regardless of whether it was in-house or part of an agency holding company. They pioneered “best in-class, gold-standard” ideas and processes within media, entertainment and sports sponsorship and built strong, direct relationships across the industry that helped propel Anheuser-Busch to a 50% share of the US beer market.
Before I took the job at AB InBev, I used to call on the client as a Sales Director at ESPN. I always wondered, “When is AB InBev going to hire a media agency?” I mean, why would you have an in-house agency, especially for a piece of business as large as this one? Wouldn’t it be better, easier, more efficient, etc. to have one of the big media agencies? After I joined BMG, the quality of the work, people, their knowledge of the business and their ability to deliver significant savings and value was second to none. My sentiment quickly changed to “Why would AB InBev ever hire a media agency?”
The beginning of the end of BMG was in the second half of 2011, just before I joined, when it was decided that media planning should be outsourced to a media agency partly to save money and partly because the perceived thinking was media planning could be done better with an external agency and all of its perceived innovation, talent and resources.
While on paper it sounded like a great idea, in reality it wasn’t the right solution. First of all the reduction in internal headcount didn’t offset the incremental cost in an external media agency. And more importantly the separation of planning and buying across an internal and external organization did not optimize a media process that in today’s world has to be more in sync than ever before. Media planning and buying need to be together within one organization. Ultimately, you have an external agency focused on trying to get the piece of the business they don’t have (media buying) while at the same time trying to service and have a relationship with the very media client they are trying to put out of business.
The argument presented by the media agency was that BMG was built for scale and big, traditional sports deals but that today’s marketplace demanded an ever evolving, agile approach to systems, data/analytics, targeting/optimization, social, mobile, search, video and programmatic buying.
To all of that I say the following: Yes, BMG was originally built for the media marketplace of the early ‘90s, but over time BMG was as much in step with any media agency or even ahead of it. Despite having large scale sports commitments, BMG continued to move money to digital, tripling it over the three years I was there. It was BMG that pushed for the organization to create a digital marketing group at a time when the company lagged significantly behind most companies in digital acumen.
And I throw out a failure as an example of BMG’s forward thinking: Remember when bud.tv launched in Feb 2007? Ultimately it met its demise two years later. So many brands today talk about being “content creators,” but Anheuser-Busch took a real gamble to create the first brand-led digital entertainment network before anyone was talking about content creation and curation. There are other examples of BMG’s ingenuity and risk-taking but the point is that it had always evolved and could do so for the future.
The media planning agency also claimed that today’s media world required different structures and skill sets. BMG had a digital media team that was second to none. I would put them up against any media agency personnel that I have met. With no increase in staff, they were able to execute the growing budgets flawlessly, utilizing the latest platforms, measurement techniques and technology to stay on the leading edge. BMG was already set up to deliver success because they had the infrastructure in place to deliver in the new media world. But more to the point, with continued investment and proper staffing, I have no doubts that BMG could have continued to deliver exceptional benefits for the company long-term. With such a strong aversion to adding headcount and other resources amongst senior leadership and such a bullish approach to outsourcing, it created less-than-ideal standards by which BMG was evaluated.
One of the best known issues in the industry is talent turnover. With an in-house model there was truly the opportunity to leverage years of experience, build on past successes, apply key data and learnings into optimization and future media plan development. This flies in the face of the media industry now. It is a nightmare to keep continuity on media teams, fueling one of the reasons so many clients put their account up for review or now make demands that agency personnel have to be willing to commit to 2+ years on the same piece of business. In-house personnel also streamlined all decision making where a "yes" was a "yes" from BMG and a "no" was a "no." This direct way of doing business and making decisions made it exciting for media partners to bring us new opportunities before anyone else.
So why am I so passionate about BMG and compelled to write this now? Not only because of what you wrote but all of the other fallacies being thrown around in the marketplace about BMG and the benefit of an external media agency. My final exclamation point to this is the amount of “savings” that an external media agency could bring to the business compared to BMG. A piece of the transparency puzzle that doesn’t get talked about as much is the lack of accountability for the savings promises delivered during the pitch process and the execution of supposed savings once an agency wins the business.
The new media buying agency promised nine-figure savings in the first year (2015). That's impossible given what I know about the BMG rates. On a straight apples-to-apples comparison of inventory and media, we all know that can’t be done. So what you end up with is a media strategy dictated by savings targets. The agency can’t spend with certain media partners because they can’t deliver enough savings or instead of buying targeted inventory they’ll buy broad rotations or cheap (non-viewable) open web programmatic inventory. We all know the tricks of the trade to demonstrate “savings,” but at the end of the day, none of these “savings” tactics will grow brands and deliver effectiveness.
We will probably never see another client set up the in-house capabilities that BMG had which is a shame because I witnessed first-hand how powerful this structure can be. It’s too hard to get the headcount and resources to start from the ground up. AB InBev had a competitive advantage with top tier talent across all disciplines and geographies that delivered substantial benefits to the organization.
Best regards, Blaise D’Sylva
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