Media traders are the front-line troops of the industry, striking wide-ranging advertising deals with TV stations, newspaper owners, poster operators and, increasingly, websites.
They are the hard-nosed agents looking to cut the best deals on advertising spots and space for their clients - manufacturers, retailers, financial services and the Government.
By pooling vast advertising budgets from different clients, the biggest agencies can strike cost-effective deals with broadcasters and publishers and distribute the savings back to those clients. And, happily for the traders, the media world has just turned into a buyer's market.
The slide in ad revenues as brand owners cut budgets following the financial collapse of autumn 2008, leaving many slots unsold, gives traders the upper hand in negotiations with media owners.
This is particularly true in television, where stations are scrabbling for ads to fill their breaks. Newspaper and magazine bosses can keep prices up by cutting back pages, but increased competition for declining ad budgets is forcing them to offer the traders ever better deals.
With power comes responsibility. If the traders - who have a reputation for aggressive, uncompromising tactics - push prices down too far, they risk undermining the media owners' ability to create attractive editorial. They also risk souring relationships with those media owners in the long term.
Trading is poised to undergo a period of massive change. Media owners are starting to consolidate their sales operations, both within media groups and across different companies.
A variety of combinations are possible in the TV market, with speculation that Channel 4 could merge with Five or BBC Worldwide, or combine its sales operation with Sky. Such moves could precipitate the biggest shake-up in the way media is traded for three decades. Similar consolidation could take place in press and cinema, while it has already happened in commercial radio.
Aginst this backdrop, Media Week put five of the UK's highest-profile media traders on the spot to uncover the big issues facing the market. Is big always beautiful, or can traders with smaller budgets create powerful tailor-made solutions for clients?
Does the pre-Christmas "trading season" for TV deals mean TV traders can take a breather for the rest of the year? And what effect will the fundamental changes the TV market is about to undergo have on trading?
Steve Bignell
Joint head of trading
MediaCom
Major clients: RBS, Volkswagen, T-Mobile, BSkyB
Billings: £1.1bn in 2008
How cyclical is your role?
TV was historically traded during the last quarter of the year, meaning there was a build-up to that big trading season. However, over the past few years, there have been ongoing conversations all year round. We strike a deal with an annual contract, but we recognise that parts of that deal may not work, so we then tinker with it.
How would the merger of C4 with either Five or BBC Worldwide affect trading?
There are major changes coming, but it really is too early to make the call. The trick is to be fleet of foot so you can handle those changes when they come. The world will be very different in 2012, when all channels are digital, and we could see huge changes in trading mechanics. We will experience shifts in the market in the next 18 months, but the principles of trading and being a negotiator won't change. The role of a trader will still be about understanding what clients and media owners are looking for and achieving win-win scenarios.
How has the recession affected trading deals?
It is a buyer's market at the moment, particularly in TV. Press media owners have the luxury of reducing pagination - and therefore ads - to keep their rates up, but TV media owners can't do this. The art of negotiation is about pushing media owners for the best deal, without damaging the long-term relationship. Are we going to see steady, sustained growth again? Not for a while.
What do you do for the rest of the year once the annual deals have been struck?
Trading is not just about completing a deal on 24 December and going away for the rest of the year - you have to be present the whole time and be able to have ongoing discussions.
Pedro Avery
Managing director Arena BLM trading and engagement
Major clients: Setanta, Suzuki, Tesco Personal Finance
Billings: £135m
in 2008
Why would a brand put its media buying with a small agency, given the wholesale discounts available to the biggest shops?
We only do client-by-client deals; we don't group our clients' expenditure together and trade that in one wholesale lot. I am able to do this because of the coverage and focus I bring to each client and each negotiation. If you are a big buying group that trades everything in a big lump sum, you have to distribute the savings to clients. But how neutral can you be in media selection when you've decided where to spend the money? I can walk away from a deal at any time if it is not right, but that option is impossible for the big buyers. Those great super traders become like media owners: the client has to negotiate with them to extract value, and they effectively act as brokers to the clients that shout loudest.
Is the traditional trading model obsolete?
The biggest guys are suffering the most as revenue falls. I'm close to my clients - I don't have 2,000 clients, but about 60. I hate agency deals and I hate big agencies. They are confusing the market and clients are getting poor value.
How is the recession affecting trading deals?
The recession is not affecting most of the TV deals because they have been set for 2009. Clients are losing value because these guys have already set their stalls out.
Will more smaller agencies start to consolidate their buying power to achieve greater scale?
The big agencies just pass business between each other, so small agencies aren't losing business to the big guys. We occasionally lose a client because it is bought out by a multinational.
Chris Hayward
Head of investment,
ZenithOptimedia, and joint head of buying, Vivaki
Major clients: Toyota, Mars, L'Oreal, B&Q,
Estimated 2009 billings: £1.3bn
What is the secret of a successful trading deal?
The deal that suits all parties and has the most integrity is the one where each party feels as though they have won 60/40. If you have slaughtered someone in a negotiation, the other party will feel residual resentment that could carry forward into future negotiations. We don't strike shoe-horn deals where you get a general shape and fit everything in, rather we pay full attention to client plans. The notion that we play clients off against each other is absolutely not the case - I've never come across that in all my time here.
How is the recession affecting trading?
Everyone knows about the decline in advertising revenues, but each medium has reacted differently. Although their decisions may not have been prompted by the decline, companies such as News International and Associated Newspapers have restructured their sales offering, so they have a more consistent approach across all their titles. Certain media owners are starting to look at different ways to boost their revenues and some of the traditional trading strategies are being challenged. If there is a good thing to come out of the state of the market, it is that some of the old die-hard habits will be ditched in favour of new ways of doing things. Sales teams such as the Telegraph actively pursue new methods of trading a deal - the Telegraph is admirable in the way it wants to do a deal and keep money coming through its door.
What are the implications of media owners going directly to clients?
If media owners believe they can tap into revenue streams by taking this approach, it is only natural they will try to make direct contact. I don't think agencies will stop direct overtures to clients - this is pretty much accepted as standard behaviour for press sales teams.
Steve Goodman
Managing director, print trading GroupM
Major clients: COI, Morrisons, Argos, BSkyB
Press billings: £715m for year to April 2009
Will more smaller agencies start to consolidate their buying power to achieve greater scale?
I predict a number of smaller agencies will see the benefits of being absorbed into bigger groups, while offering possibly a more personalised service. But business will be very hard for a small start-up agency.
How has the recession affected the press market?
The recession has increased creativity in newspaper advertising. For instance, there have been cases where half-page ads float on top of pages, with editorial underneath. You wouldn't want solutions like that all the time, but it is no bad thing as part of an occasional campaign - I don't think readers will be upset. We have also seen national newspapers taking full wraparound front covers, as Fiat did recently with the Daily Express and the Daily Star. In general, newspapers are being more creative to help generate extra revenue. I'm excited by this development and I don't think it will damage papers. If media owners look at opportunities to give advertisers greater stand-out, I see that as a good thing. However, there have been negative impacts of the recession, such as reduced staff levels and resources tightening on both sides of the fence. We will start to see bigger, all-encompassing deals between media owners - single-platform and cross-media deals. The bigger agencies are positioned to do these types of deals.
How cyclical is your role?
The nature of the press market means things have to be done very short term, often within days or hours. I don't think there will be a significant move to more cyclical planning, buying and trading.
Steve Platt
Trading director
Aegis UK
Major clients: COI, Asda, General Motors, Johnson & Johnson, BMW, HBOS, Coors
Billings: £1bn
in 2008
What is the biggest issue for media trading?
The biggest issue all traders will have to get their minds around is further consolidation of sales and media. Many conversations between TV companies are taking place regarding who will be selling what next year, and cinema could also be streamlined from two sales houses to one. There are discussions on some of the weaker national press titles being sold, while consolidation in commercial radio has already happened. If you had a major merger such as Channel 4 and Sky, it would be a powerful combination. Consolidation will make things tricky for us, creating far more powerful sales operations. There could be a big step change and there hasn't been a major change in sales for 25 years.
Will consolidation alter the way media is traded?
If ITV got out of contract rights renewal and there was a merger between TV sales companies, there would be an opportunity for media owners to look at the way they trade. TV trading has historically been done on station average price and share, but if there is consolidation, media owners will revisit the way they do business. There are always alternatives, such as trading on volume or client-by-client deals.
Are major media agencies well-placed to handle clients' digital media?
Digital is under pressure for the first time and the days of 50-70% revenue increases are over. Clients are asking their agencies to get the same type of deals with digital media owners as with other media. Agencies can trade digital display, which is no different to trading with any other media owner, although search is different as it is done on cost-per-acquisition. Expertise is important, but I see no reason why major agencies can't do as well as smaller shops. Aegis has expertise in digital through our agencies Diffiniti and Isobar, and we can gain better deals than a small boutique buying shop.
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