I to know how advertising is purchased by the big multi-national corperations (e.g. toyta, honda, levis jeans, mc. donalds, burger king, ect.ect) Are the radio, TV, newspaper, magazine, internet ad space purchased by the corperations themselves by an in-house department, or are they purchased my advertising agencies, and media buying comapies?
Looking for ad execs, and media buyers.
- Thread starter Doctor Zoidburg
- Start date
Depends on the size of the company, many have ad agencies which are responsible for all media buying no matter what the medium is. Do you have a more specific question?
The short answer is that both of those situations occur, it depends on the size of the company.
When you have an aagency do the 'buy" it is at a discount (usually 15%). Sometimes you can get your in house agency recognized as an agency and qualify for the discount.
When you have an aagency do the 'buy" it is at a discount (usually 15%). Sometimes you can get your in house agency recognized as an agency and qualify for the discount.
Need to know about media buying.
I am interested to know if the larger multi national companies (e.g. toyota, schick, proctor and gamble) will go through 1 ad agency to produce advertising then buy media space to put their ads in.
I suspect that smaller well known chain stores and businesses might have their own in-house ad deparments to buy ads.
I would like to also know if there is a politics to media buying. In a situation for example where a budget is handed over to an ad agency to produce the ad and buy the media. Might it be the case where the main ad agency will farm out the advertising production to other ad agencies? Would it be fair to assume that if there was a budget to be spead out to cover the country and different demographics of the population, might it be a situation where the main advertising agency will hand out a piece of the budget to for example the jewish or italian ethnic newspapers to spead out the budget to cover all desirable demographics?
I am interested to know if the larger multi national companies (e.g. toyota, schick, proctor and gamble) will go through 1 ad agency to produce advertising then buy media space to put their ads in.
I suspect that smaller well known chain stores and businesses might have their own in-house ad deparments to buy ads.
I would like to also know if there is a politics to media buying. In a situation for example where a budget is handed over to an ad agency to produce the ad and buy the media. Might it be the case where the main ad agency will farm out the advertising production to other ad agencies? Would it be fair to assume that if there was a budget to be spead out to cover the country and different demographics of the population, might it be a situation where the main advertising agency will hand out a piece of the budget to for example the jewish or italian ethnic newspapers to spead out the budget to cover all desirable demographics?
bananaman said:
Sorry this is not correct. Ad rates for agencies are 15% more. So that way they can get their commission.
Toronto Media Buys
Well, according to my good friend who owns a Toronto Marketing Agency http://www.marketbeta.com he usually get between a 15-20% discount on media buys for his clients since they are a recognized marketing agency. His return is that he is charging clients for content creation etc...
And yes, they do gladly accept adult entertainment clientel.
Well, according to my good friend who owns a Toronto Marketing Agency http://www.marketbeta.com he usually get between a 15-20% discount on media buys for his clients since they are a recognized marketing agency. His return is that he is charging clients for content creation etc...
And yes, they do gladly accept adult entertainment clientel.
specific examples?
Can anyone give me specific examples on how certain multi-national comapanies and regional companies handle their ad campaings. It is not nessesary to get too specific, the names and identities can be changed to protect the innocent. I just need to know the mechanics of the tansaction where advertising is purchased by different types and sizes of businesses.
I would also like to know the politics behind this biz and if smoozing (or bribes) is nessesary to get the contracts.
Can anyone give me specific examples on how certain multi-national comapanies and regional companies handle their ad campaings. It is not nessesary to get too specific, the names and identities can be changed to protect the innocent. I just need to know the mechanics of the tansaction where advertising is purchased by different types and sizes of businesses.
I would also like to know the politics behind this biz and if smoozing (or bribes) is nessesary to get the contracts.
Ad agencies come up with the concept/design of the campaign. They may or may not do the actual purchasing of the media for the client. Many multi-national companies have their own print/media purchasing departments in-house. There are also companies whose sole job is media buying. So the multi-nationals may hire the ad agency or marketing company for the campaign concept, and then hire a media buying company for the actual purchase of the media or do it themselves.Doctor Zoidburg said:
In the 80's, there were so many kick-backs and bribes taking place in the industry that it was nothing for a buyer with millions of dollars in his/her budget to spend, to find a brand new car in their driveway at the end of a large campaign. However, it all came crashing down when a large multi-national had their own production department investigated by the Pinkerton boys, and ended up firing the whole lot of them for the bribes that were uncovered. Since that time...many ad agencies and corporations have a strict policy of 'no gifts'. You can't even buy them a bottle of wine at Christmas. They are all much more cost conscious now too, so it often comes down to the best price wins the contracts. Schmoozing still exists but you have to be very careful how you do it. You can ruin your reputation trying to schmooze the wrong person.
First thing you need to do is find out if the multi-national is doing their own purchasing. If they are, ask if they have a preferred supplier list. If they do, ask how you can get on that list. If you are not on the list, then you don't have a hope in hell of getting a chance to quote projects. Once you are on the list, then you will automatically get a chance to quote on all the projects. Also...many companies, once a year, will put out a call for all suppliers to bid on contracts for their print/media. Generally, they will take 3 or four companies and those will become their sole print/media suppliers for the year.
On a personal note....the multi-nationals are a pain in the butt to do work for. They usually pay in 90 - 120 days, they suck up all of your time and resources, and they are incredibly demanding. Sure you get the big bucks for it, but sometimes it isn't worth it. I prefer the medium sized company. They generally trust you more, demand less and pay quicker.
La Contessa
I agree with everything Contessa said! At the company i work for, we have very little in the way of global advertising even though we are very much a global company. It's actually quite difficult to do a multinational ad - every location wants their own input on both the creative and the execution. For example, we look at some of the ads our American friends do and we just can't see them working up here. By the same token, for some of our ethnic-specific advertising the stuff that comes out of the respective home countries is close but not quite right for a Canadian market. In these cases we usually take the spirit of the ad but we'll still customize somewhat. For our larger print placements we try to keep one national flavour regardless of what language we're printing the ad in.
A lot of the times an ad company will come to us and suggest certain campaigns - run ad #1 in print publication ABC for the period nnnnn followed by ad #2 in the same publication while concurrently running ad #3 in publication DEF ... Our ad campaigns have been short (2 - 3 weeks) to long (a few months). Sometimes we'll punch things up with a few TV spots as well. If we go with the suggestion, the ad company will arrange the media buys on our behalf.
Whenever an ad company comes to us (we typically use 2) there are endless meetings about the smallest things. I actually feel sorry for the ad people because it's very difficult dealing with a corporation our size in a sector as competitive as ours. I often wonder if it's worth their effort but they stick with it so I guess they're making good coin off us. (I don't actually see the ad invoices but I know the overall size of our ad budget; it's enough that anyone would want a go at it.)
Schmoozing happens but at a very low volume level. All of corporate North America is pretty tight about these things. My impression is that it's a little looser in Europe but that might not last too much longer. Even as recent as 5 years ago it was pretty straightforward to count on suppliers of all kinds to give us stuff and freely bend or outright break the interpretation of "nominal value". That all changed in late 2001, partially because of Sept 11. There was no terrorist threat obviously but most companies, particularly in my sector tightened belts like never before. My company in particular spent over $20 million (US) in the span of 2 months rebuilding (re-equipping) our new NY office which was in the World Trade Centre until that fateful day. When companies blow wads of cash like that the first thing to get nixed is entertainment, meals, expenses ... So it was no real surprise that our flow of free stuff from suppliers dried up.
After Sept 11, there was a slew of fraud cases (WorldCom, Enron etc) so Sarbanes Oxley, Basel II etc came into effect and that also tightened what we're allowed to do. Because of this I personally don't expect the high days of schmoozing to ever return. Too bad - it was fun while it lasted!
And on a final note - like Contessa says large corporations are slow to pay. You won't have to worry about not getting paid - it's not like we don't have the money. It's just that an invoice arrives, then it gets routed to someone to review, it sits on the reviewer's desk for a week or more, then it gets signed off. If it's over a certain amount (and ad invoices always are) then a second person needs to sign off so it gets routed to that person where it sits for a week or so, then it goes to accounting where they process it in the global accounting system and that takes another week. Then a cheque gets cut. But since the cheque is over a certain amount it needs 2 manual signatures so it gets routed to 2 different people. Then the cheque is matched one last time with the invoice, supporting material and the original purchase order. Then the cheque gets sent out. If even one person in the entire chain is on holiday, that throws everything off and increased the amount time to get paid.
It's funny because most invoices that cross my desk say stuff like "Terms - Net 30" but we never pay attention to that. Some invoices even offer a 2% discount if we pay within 20 days but we never pay attention to that either event hough 2% can easily equate to a lot. And pretty much every invoice threatens to charge us x% per month for overdue accounts but that never happens because no one wants to piss us off and lose the account forever.
So eventually the bills get paid, but it does take a long time.
A lot of the times an ad company will come to us and suggest certain campaigns - run ad #1 in print publication ABC for the period nnnnn followed by ad #2 in the same publication while concurrently running ad #3 in publication DEF ... Our ad campaigns have been short (2 - 3 weeks) to long (a few months). Sometimes we'll punch things up with a few TV spots as well. If we go with the suggestion, the ad company will arrange the media buys on our behalf.
Whenever an ad company comes to us (we typically use 2) there are endless meetings about the smallest things. I actually feel sorry for the ad people because it's very difficult dealing with a corporation our size in a sector as competitive as ours. I often wonder if it's worth their effort but they stick with it so I guess they're making good coin off us. (I don't actually see the ad invoices but I know the overall size of our ad budget; it's enough that anyone would want a go at it.)
Schmoozing happens but at a very low volume level. All of corporate North America is pretty tight about these things. My impression is that it's a little looser in Europe but that might not last too much longer. Even as recent as 5 years ago it was pretty straightforward to count on suppliers of all kinds to give us stuff and freely bend or outright break the interpretation of "nominal value". That all changed in late 2001, partially because of Sept 11. There was no terrorist threat obviously but most companies, particularly in my sector tightened belts like never before. My company in particular spent over $20 million (US) in the span of 2 months rebuilding (re-equipping) our new NY office which was in the World Trade Centre until that fateful day. When companies blow wads of cash like that the first thing to get nixed is entertainment, meals, expenses ... So it was no real surprise that our flow of free stuff from suppliers dried up.
After Sept 11, there was a slew of fraud cases (WorldCom, Enron etc) so Sarbanes Oxley, Basel II etc came into effect and that also tightened what we're allowed to do. Because of this I personally don't expect the high days of schmoozing to ever return. Too bad - it was fun while it lasted!
And on a final note - like Contessa says large corporations are slow to pay. You won't have to worry about not getting paid - it's not like we don't have the money. It's just that an invoice arrives, then it gets routed to someone to review, it sits on the reviewer's desk for a week or more, then it gets signed off. If it's over a certain amount (and ad invoices always are) then a second person needs to sign off so it gets routed to that person where it sits for a week or so, then it goes to accounting where they process it in the global accounting system and that takes another week. Then a cheque gets cut. But since the cheque is over a certain amount it needs 2 manual signatures so it gets routed to 2 different people. Then the cheque is matched one last time with the invoice, supporting material and the original purchase order. Then the cheque gets sent out. If even one person in the entire chain is on holiday, that throws everything off and increased the amount time to get paid.
It's funny because most invoices that cross my desk say stuff like "Terms - Net 30" but we never pay attention to that. Some invoices even offer a 2% discount if we pay within 20 days but we never pay attention to that either event hough 2% can easily equate to a lot. And pretty much every invoice threatens to charge us x% per month for overdue accounts but that never happens because no one wants to piss us off and lose the account forever.
So eventually the bills get paid, but it does take a long time.
Procurement of advertising by the large multinationals is manily done via their media partners who usually win long term partnership agreements. These agreements are secured by HQ usually and now tend to be global in nature. Several possible reasons: consistent message, themes, product knowledge, integrated marketing communications approach, internal process knowledge, segmentation knowledge, etc... that can only be gained through long term partnerships.
I want to start a small company to deliver advertising directly to the consumer. I want to specialize putting the advertising directly into the hands of the most desirable consumer demographic for each product or service industry. What can I charge per consumer for delivering the ads directly into the hands of the most desirable demographic? (advertiser can specify, age, income and gender of demographic)
Politics of advertising.
I have also experienced some politics in my limited exposure to the ad business. There was an multi national car company that introduced a new car on to the market and had a budget to do this task. I was under the impression that the ad buying company was buying all over the place and realy did not care where the money went as long as the job got done. An ad was placed in an ethnic magazine that was new and had no track record. This magazine craimed a certain exposure into a specific ethnic market, but I believe that as long as the mags were printed and a satistc was presented not much more was required to get this client. Is this type of thing common in the ad biz, or do hard facts have to be presented to verify the effectiveness of the ad placement?
I have also experienced some politics in my limited exposure to the ad business. There was an multi national car company that introduced a new car on to the market and had a budget to do this task. I was under the impression that the ad buying company was buying all over the place and realy did not care where the money went as long as the job got done. An ad was placed in an ethnic magazine that was new and had no track record. This magazine craimed a certain exposure into a specific ethnic market, but I believe that as long as the mags were printed and a satistc was presented not much more was required to get this client. Is this type of thing common in the ad biz, or do hard facts have to be presented to verify the effectiveness of the ad placement?
Broadcast Media 101
here's an oversimplified version that I hope helps:
(as it relates to broadcast media - TV and RADIO)
Pepsi makes soda pop.
They're in the business of making, bottling and selling soda, but not in creating and placing advertising campaigns.
So they hire an ad agency to do either "creative" (make the spots) or "media" (place the spots on their behalf) or often, but not always, do both.
There's about 10-12 major ad agencies in Canada -- most are owened by international "super agencies" which may have many agencies "under their umbrella" -- some shops are know for great creative (ie. TAXI, ZIG) others for negotiating media (MBS, Zenith Optimedia, OMD) and some both.
Creative shops are judged based on how they execute the client's vision and are judged based on how the client "feels" they've done and often if a campaign has driven sales. A lot of ads in Canada are merely transcreated from the U.S. -- less and less is being done here.
Media shops use the fact that they've got a "roster" of accounts to buy "in volume" from broadcasters (for example, M2 Universal has Sony Entertainment, Microsoft, Labatt's and General Motors -- all being bought out of the same shop) -- they use this leverage to get the greatest amount of "ad space" for the least amount of money. The trading currency which levels the playing field for all broadcasters involved is usually either a CPM (cost to reach 1,000 viewers) or CPP (cost per rating point) system.
To your original questions -- since they buyers are given a whack of $$ from the national account (ie. PEPSI) and can pretty much spend it as their planners see fit -- there's TONS of bribery, kick-backs, and "greasing the wheels" that goes on -- some above board (ie. buy the Olympics on CBC if you're Tim Horton's -- boom -- trip to Greece for the Planning Team) some below board -- (ie. taking media buyers to dinner, Raptors games, etc...)
hope that answers your question. PM if you need anything specific.
2T
here's an oversimplified version that I hope helps:
(as it relates to broadcast media - TV and RADIO)
Pepsi makes soda pop.
They're in the business of making, bottling and selling soda, but not in creating and placing advertising campaigns.
So they hire an ad agency to do either "creative" (make the spots) or "media" (place the spots on their behalf) or often, but not always, do both.
There's about 10-12 major ad agencies in Canada -- most are owened by international "super agencies" which may have many agencies "under their umbrella" -- some shops are know for great creative (ie. TAXI, ZIG) others for negotiating media (MBS, Zenith Optimedia, OMD) and some both.
Creative shops are judged based on how they execute the client's vision and are judged based on how the client "feels" they've done and often if a campaign has driven sales. A lot of ads in Canada are merely transcreated from the U.S. -- less and less is being done here.
Media shops use the fact that they've got a "roster" of accounts to buy "in volume" from broadcasters (for example, M2 Universal has Sony Entertainment, Microsoft, Labatt's and General Motors -- all being bought out of the same shop) -- they use this leverage to get the greatest amount of "ad space" for the least amount of money. The trading currency which levels the playing field for all broadcasters involved is usually either a CPM (cost to reach 1,000 viewers) or CPP (cost per rating point) system.
To your original questions -- since they buyers are given a whack of $$ from the national account (ie. PEPSI) and can pretty much spend it as their planners see fit -- there's TONS of bribery, kick-backs, and "greasing the wheels" that goes on -- some above board (ie. buy the Olympics on CBC if you're Tim Horton's -- boom -- trip to Greece for the Planning Team) some below board -- (ie. taking media buyers to dinner, Raptors games, etc...)
hope that answers your question. PM if you need anything specific.
2T
TWOTIGER,
What is the best way to get contracts from ad agencies to deliver it to specific demographics for them?
Zoidburg
What is the best way to get contracts from ad agencies to deliver it to specific demographics for them?
Zoidburg
Yah sure. Let me tell you how that works. In the newspaper business we have two sets of rate cards. One is for agencies and the other one is for the local bar or club whatever or who ever is buying their own ads. The one for agencies is 15% more then the regular rate card. The agency will show you the rate card with the 15% more rates. He will then ask you to pay that much so he can get his cut. Or he will say to you these are the rates but I am going to give you a 15% discount. And then he charges you the real rate which in reality there is no discount at all. He is just making you believe that there is so he looks like Mr. Nice Guy.MartiniGirls said:
call 'em...
...this may seem like an oversimplification again, but if you want some of their $$ you have to call them and ask for it...call the agency, ask for the name of one of the planners / account directors on whatever business you target -- and call to schedule a time to set up a pitch -- and then go in and pitch them on what you have to offer -- it's a good "fit" and you can negotiate a fair price (based on the "eyeballs" or "ears" you can accurately deliver) -- that's all there is to it ---
couple of tips --
have your shit together going in (ie. reserach, hard numbers to back up what you're saying) -- don't waste their time with what you "think" is a good idea -- be able to prove it's worth their $$ -- also if you can't get the name of the person at the agency level, call and bug the client direct (ie. call the company's head office and leave a message for the VP Marketing or VP Advertising) -- they will NOT want to deal with you, but most likely will tell one of their underlings to follow up with you, who in turn will tell you "we have an agency for that, call so-and-so at..."
good luck
2T
...this may seem like an oversimplification again, but if you want some of their $$ you have to call them and ask for it...call the agency, ask for the name of one of the planners / account directors on whatever business you target -- and call to schedule a time to set up a pitch -- and then go in and pitch them on what you have to offer -- it's a good "fit" and you can negotiate a fair price (based on the "eyeballs" or "ears" you can accurately deliver) -- that's all there is to it ---
couple of tips --
have your shit together going in (ie. reserach, hard numbers to back up what you're saying) -- don't waste their time with what you "think" is a good idea -- be able to prove it's worth their $$ -- also if you can't get the name of the person at the agency level, call and bug the client direct (ie. call the company's head office and leave a message for the VP Marketing or VP Advertising) -- they will NOT want to deal with you, but most likely will tell one of their underlings to follow up with you, who in turn will tell you "we have an agency for that, call so-and-so at..."
good luck
2T
What is this worth?
I have a method of targeting specific demographics with permission based or non permission based direct mail advertising. What is this service worth? example: If I can specificly target young girls 14 to 24 with these ads (some permission based). What would the jeans company that makes slinky low cut jeans pay for me to target this market with direct mail ads, contest, discount coupons, and promotions?
I have a method of targeting specific demographics with permission based or non permission based direct mail advertising. What is this service worth? example: If I can specificly target young girls 14 to 24 with these ads (some permission based). What would the jeans company that makes slinky low cut jeans pay for me to target this market with direct mail ads, contest, discount coupons, and promotions?
Without meaning to sound flippant, they will pay you whatever it's worth to them. If you need to ask this question, then I respectfully submit that you haven't researched your client enough before walking in to the meeting.Doctor Zoidburg said:
At some point, you need to know that if the client does X then Y then Z, they should see results that translate into n% increase in sales and thus p% in profits. You can choose to make this a part of your pitch or you can not overtly say it (depends on the client if you should say it or not) but you should at least know this information yourself before you walk in their door.
Once you know this info, you can price yourself accordingly. In this example, if the jeans company stands to increase sales by $300,000 per year, you can hit them up for say, $45,000. For this they get creative, very targetted advertising etc to 89,000 dedicated customers who all live within 10km of a store that sells their stuff. So for a mere 50.56 cents per customer, they can see their sales increase x% ($300K).
P.S. Be careful on the non-permission based advertising. One of these years the Privacy Act may be tighted up to disallow that kinds of stuff.
What is charged for other methods of advertising.
I need to know what the other methods of targeted marketing cost to the advertiser. What I plan to offer the advertiser is direct mail advertising, contest invitations, free offer or discount coupons directed at a specific targeted market. Using the example of the slinky jean manufacturer, this company would be interested in girls between 14 to 24, residing in middle to high income areas or young females of that age group with jobs or credit cards. Here are some questions I need to be answered.
1) Would the main advertising comapny provide the concept, produce the ad and print it for my "targeted distribution"?
2) What do other forms of advertising delivery cost to the advertiser?
3) I assume that since my advertising delivery method mainly deals with direct mail advertising, I would not be effected by the "privacy act". It is only when the laws come into effect that I will be restricted from flooding e-mails with "spam".
4) I assume that I can only charge one client the same as the other, regardless of what they have to gain from separated advertising campaings.
example: I can only charge the same $0.20 per contact with the target market, wheather they sell cars or jeans.
I need to know what the other methods of targeted marketing cost to the advertiser. What I plan to offer the advertiser is direct mail advertising, contest invitations, free offer or discount coupons directed at a specific targeted market. Using the example of the slinky jean manufacturer, this company would be interested in girls between 14 to 24, residing in middle to high income areas or young females of that age group with jobs or credit cards. Here are some questions I need to be answered.
1) Would the main advertising comapny provide the concept, produce the ad and print it for my "targeted distribution"?
2) What do other forms of advertising delivery cost to the advertiser?
3) I assume that since my advertising delivery method mainly deals with direct mail advertising, I would not be effected by the "privacy act". It is only when the laws come into effect that I will be restricted from flooding e-mails with "spam".
4) I assume that I can only charge one client the same as the other, regardless of what they have to gain from separated advertising campaings.
example: I can only charge the same $0.20 per contact with the target market, wheather they sell cars or jeans.
