How rival pools rate on the trading floor

Adam Woods reports on the history, operation and current standing of the individual media negotiating units created by the major agency groups.

In media terms, the global media groups use their combined buying operations rather as the rest of us instinctively draw ourselves up to our full height when conflict threatens. In a globalised world, even those companies that pride themselves on their finesse and lightness of touch like to give a little nod to their sheer scale every now and again.

Few agency groups are above flexing their cumulative muscle in pursuit of improved upfront rates when the annual media-owner trading round arrives again.

And when Interpublic, WPP and Omnicom created their own negotiating units in 2001, 2003 and 2004 respectively, it rather looked as if aggregated groups were soon going to be the sole players on the trading floor. In practice, those three have remained the most active corporate-level negotiators.

Media owners have not always responded favourably to the concept and it has been suggested that clients, too, are not necessarily enthusiastic about the prospect of their own business being used to leverage discounts for competitors whose work resides within the same group.

Far from the corporate takeover some were expecting, the power of the individual agencies to make their own planning decisions has remained across the board, but the leading buying pools still wield fearsome power. And what remains almost as striking are the differences in the structure of the organisations among the various groups.


GroupM is generally viewed as the archetypal buying pool, which is ironic, given that it is configured differently to all of its rivals and its buying activities account for just a small proportion of its overall brief.

Founded in April 2003 as a negotiating unit for MindShare, Mediaedge:cia and BJK&E, GroupM added MediaCom to its portfolio in summer 2005, when WPP added Grey to its stable. In a flash, GroupM saw its UK billings double. From around £900m at launch, four and a half years on, they stand at £2.5bn.

"When Martin Sorrell bought Grey, that changed our size and structure overnight," says GroupM chief operating officer Nick Theakstone. "The old GroupM was really just the negotiating arm of the WPP media companies. When MediaCom came into the frame, we changed the whole structure, right across the world."

Today, GroupM has its fingerprints on all sorts of ventures. In the US last year, for example, its activities extended for the first time into primetime TV production, with the aim of creating proprietary product placement vehicles, starting with ABC's October Road, which GroupM co-funded.

At the wilder fringes of GroupM's UK activities are the Universal Music joint venture BrandAmp, and a new partnership with US word-of-mouth marketing specialist BzzAgent. But at its heart, GroupM is a parent company that does anything its agencies might need it to do - including upfront media negotiation.

"We see ourselves in a completely different light to the rest of the competition, just because of where we are currently at," says Theakstone.

"We really are a true parent company, whose purpose in life is to provide our agencies with whatever support they need."

In practice, the distinction between the beefy, 160-strong GroupM and the relatively slimline forms of OPera and Magna is less pronounced than it might appear, at least where trading is concerned. Only a handful of GroupM's staff are actually concerned with negotiation, with the rest applying themselves to the company's other tasks, which include content creation, research, IT support, finance and proprietary tool development.

GroupM's relatively low profile is intentional, according to Theakstone, and reflects the continuing importance of the agency brands. "GroupM isn't a body we shout about - we just get on and do our job," he says. "The agencies are the heroes; they are the frontline teams. We sit in the background and help to enhance their product wherever we can."

Theakstone is loathe to spell out the way in which GroupM will interact with its agencies in the context of a particular negotiation. "We have got a whole mixture of ways of trading," he says. "All manner of methods are used. Of course, we work incredibly closely with our agencies and if you ask any media owner, they will say our success is driven by the fact we are joined up."

And while GroupM is a multi-faceted thing, at its heart sits the negotiating power for which the organisation was formed. "Trading is incredibly important," says Theakstone. "You are in a world of globalisation and consolidation and scale. We saw a threat coming from that and we wanted to turn that shift to our advantage. And given our size in the market, it would be criminal if we didn't use our size to force issues that we believe are worth forcing."


The distinction between OPera and GroupM, according to John Overend, joint managing director of the Omnicom negotiating arm, uncannily echoes the different approaches of their respective corporate parent groups.

"Omnicom has a history of being led by individual client and brand requirements, and that is very much the Omnicom way of doing things," he says. "Even if you look at the way Martin Sorrell runs his company, it is very top-down, and Omnicom has not done that."

Formed in May 2004 to negotiate on behalf of Manning Gottlieb OMD, OMD UK and PHD Group, OPera was never intended as a corporate oversight unit in the style of GroupM.

"I don't know if one is better than the other, really - there are advantages to both," says Overend. "It is actually arguably easier to do it the way GroupM has done it, because if you don't have a collective sense of working together, then you kind of need to impose it from the top."

Like GroupM, but unlike Magna, OPera does maintain a permanent negotiating team, and like any negotiating team, it does draw back-up from the individual agencies concerned.

"Because the negotiations are done at a very senior level, they will be done by OPera," says Overend. "It is common sense that if you go into a negotiation with 30 people, they will put up 30 people. So there are just six or seven of us down here, but we have people feeding into us from the agencies, so you could say there's 700 of us.

"The way we develop deals is basically from our individual advertisers' and agencies' requirements, so we are bottom-up, although as far as the media owner is concerned, we are still negotiating as one."

One advantage of this, he says, is that the individual agencies are able to retain their own characters. "We have OMD and PHD, who are very different in their brand offerings, and it would be wrong for us to try and dish out to them the same. Agencies do need a point of difference in a pitch - that is how we win business."

This internal division between OMD and PHD is essential given that the two compete against each other in pitches with reasonable frequency. "We believe that our two agencies should be allowed to compete, so within OPera we can't do anything that stops the agencies from competing with each other," says Overend.

In the field of research, this means that individual agencies will produce any client-specific studies, while OPera handles media-owner research and general industry trend-forecasting. "That is how we get around the conflict issue," says Overend.

He expresses surprise that GroupM and OPera remain effectively the UK's only stand-alone group negotiating points. Once confident that others would follow, he is now less certain.

"I have said that every year, and it surprises me every year that they don't," says Overend. "But you do need a certain critical mass of billings to make it worthwhile."



Trades as: GroupM

Agencies: MediaCom, MindShare, Mediaedge:cia, BJK&E

2006 ad expenditure: £1,978,621,373


Trades as: OPera

Agencies: OMD, PHD

2006 ad expenditure: £1,009,321,853


Trades as: Aegis Media

Agencies: Carat, Vizeum, Feather Brooksbank

2006 ad expenditure: £827,617,158


Trades as: Magna Global

Agencies: Initiative, Universal McCann

2006 ad expenditure: £600,849,100


Trades: agency by agency

Agencies: ZenithOptimedia, Starcom UK Group

2006 ad expenditure: ZenithOptimedia £577,364,807; Starcom UK Group £654,210,288

Source for all expenditure: Nielsen Media Research.


ZenithOptimedia chief executive Gerry Boyle wouldn't comment on arrangements within Publicis, but Linda Smith, chief executive of Starcom, confirmed that ZenithOptimedia and sister agency Starcom MediaVest conduct their media negotiations at an agency level, at least partly because of the individual size and clout of those two organisations.

The French group's media arm, Publicis Groupe Media, is well-known for its strategic inclination to maintain the two agencies as separate entities, although the creation in February of a centralised media buying business in India, uniting the local operations of ZenithOptimedia and Starcom MediaVest under the India Media Exchange brand, points to a new readiness at corporate level to pool resources.

At the time of Publicis Groupe's own inception in 2005, when the ZenithOptimedia and Starcom MediaVest networks were united under a single corporate management structure, rumours were rife that the group planned to create a corporate-level media negotiation unit in the vein of an OPera or a GroupM. However, nothing has been announced in the two years since and, in the UK at least, Publicis remains a bastion of internal independence.


Like its rivals, Aegis bought into the consolidation of media assets that swept through the global industry in 2003, creating Aegis Media as a holding company for Carat, the then-new Vizeum and Feather Brooksbank, with its functions to include media negotiation, information technology and finance.

The structure remains in place, feeling little need to draw attention to itself outside the annual round of media-owner negotiations.

Aegis trading director Steve Platt heads negotiations, calling on the senior buying teams of Vizeum and Carat as required.

By his reckoning, Aegis was the first UK agency group to trade collectively, and while he might have to have that argument with Magna Global, Aegis was certainly there or thereabouts.

"Because Aegis is not a funny name like OPera or GroupM or something, people don't seem to realise that Aegis was the first company to group trade in the UK across more than one agency," says Platt.

"When you look at group trading, it is not just a question of, 'we have got our volume, let's lump it together and approach the media owners'," he adds. "The biggest don't necessarily get the best deal. It is a question of being clever about how you use that volume."

Among Aegis's digital assets, which comprise Carat, Vizeum and Diffiniti under the Isobar grouping, collective negotiating has also taken hold this year, as the digital market has matured and prices have begun to rise.

In January, Isobar UK trading director Andy Cocker was appointed to head a digital trading board to leverage scale and find efficiencies, drawing several staff from traditional departments to build the team. The new unit is also responsible for establishing Isobar's new trading platform, I-Trade V2, which provides pooled buying data.


To give Interpublic's Magna Global division its due, it blazed a trail for collectivised buying when it launched to maximise the footprint of Initiative and Universal McCann in 2001, two years ahead of GroupM and three years before OPera.

"The market has been going this way for the best part of 10 years, but when we set Magna up, it was the first of these negotiating arms," says Universal McCann chief executive Andy Jones.

"Media has evolved over the years; you went from line-by-line deals 15 years ago, to agency deals, which came out of all that, to group deals, which are an amalgam of the two."

Magna launched with a particular focus on TV and installed Universal McCann vice-chairman and broadcast specialist Mick Perry as UK chairman, where he remains, drawing staff from the Interpublic agencies as and when particular negotiations demand.

"The reason you have to have someone to bring it together is just a function of the fact that we want to negotiate as one buying point," says Jones.

"What we tend to do is use key negotiators from within the agencies to supplement and work alongside Mick. What we haven't done is double up and have two layers of people, like some of the groups.

"We believe that we shouldn't divorce negotiation entirely from the agencies," he maintains.

The negotiating team, while variable, calls on between 10 and 20 staff from Universal McCann and Initiative. IPM Outdoor chief executive Roy Jeans, meanwhile, heads Magna's non-broadcast activities.

Although the structure of the agencies is a bottom-up one, according to Jones, there is no denying the value of scale in creating savings.

"It obviously protects our clients to have that scale at the table, although it is not all about volume at all," he points out. "You can have all the money in the world, but if you are a crap negotiator, it doesn't help you."

Aside from the combined trading, the financial and infrastructural responsibilities then sit with the individual agencies.

"We prefer to have overall control over our own destinies in that regard," says Jones.

Besides its negotiation function, Magna does take on certain other responsibilities: Magna Global Trading is Interpublic's barter arm, structuring transactions to allow clients to pay for media with other assets.

In the US, meanwhile, Magna Global Entertainment focuses on product placement, sports and entertainment.

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