Agency: Fallon London
campaignlive.co.uk, Friday, 05 March 2010 12:00AM
Media agencies didn't exist in the first 16 years I was in the business. Now they are accepted as part of the establishment, but, initially, they were feared and loathed and got off to the worst possible start.
You can't write about the evolution of media agencies without going back to the origins of ad agencies as sales reps for newspapers and magazines that were paid 15 per cent commission. J Walter Thompson was a media rep, albeit a rather superior one. Inevitably, to sell the space, it often had to produce the ad for the client so that it could collect its commission. Even before I came into the business in 1960, this had evolved to the point where agencies were hired and fired by their clients, yet paid by the media owners.
This archaic practice remains largely unchanged.
The media market was very different then: it was physically and psychologically dominated by a grave shortage of supply. First there was newspaper rationing during the war and for a period afterwards (if you couldn't hold your drink down in Fleet Street while buying the rounds for the vast, ruddy-faced ad directors, then you didn't get the space!).
A bigger challenge by the time I joined the business was the power of the unions, exacerbated by weak management and an unbelievably time-sensitive, perishable product.
Hundreds of people slog away to create a new product every day, yet if, "accidentally" at 10.00pm, a foreign object drops into the presses causing them to jam, by the time the machine has restarted, trains are missed and the production run is aborted or the papers arrive too late to be of any use. Everyone's efforts have been wasted - a perfect scenario for bully boys.
The size of newspapers and magazines was strictly limited - the overtime charged to print the extra pages was so extortionate, it wasn't worthwhile. There were no sections and no supplements, and colour wasn't used in newspapers unless it had been pre-printed weeks before. Against that, circulations were huge, with The Express and The Mirror selling nearly five million copies each and the News of the World more than eight million.
ITV had begun in 1955 and, by 1960, it was starting to become widely accepted as an advertising medium. Adland was as reactionary to change as it is now but, much later, this was to create a huge opportunity for some of us.
Each ITV contractor had a regional monopoly or duopoly. But, again, audiences were huge: I remember when buying one of my first campaigns, I was disappointed that I had achieved only 70 rating points - for one spot. It was in January in the North-East and my spot was in the first break of Coronation Street - the centre break achieved 75 per cent of the audience.
Radio was worse. There was no commercial radio at all; pirate radio was not to arrive for another 15 years. Additionally, of course, the media scene was limited by the available technology: no computers, no satellites - the digital world didn't exist.
I left school at 16 to become an errand boy at a small-to-medium-sized agency, Pictorial Publicity. I joined the media department after nine months and on my boss' door was the sign "Space Buyer". He had a secretary and me - that was it. You couldn't help being an all-rounder.
I moved in 1963 to a big agency, Greenlys, where I blagged my way in as a senior planner/buyer at the age of 19. My group head didn't understand TV and the magazine reps bought better lunches, so I was given all the TV to buy (badly as it transpired, which was bad for the client but great for my experience).
At the same time as buying £1 million TV campaigns, I was also handling Bertram Mills Circus. When the circus went on tour, I was given a budget for each town it visited. So if the circus was in Minehead, I had a budget of £250 (this is not a typo), for Kilmarnock £350 and so on. It may seem laughable but it was great experience in learning how to make a small budget work hard - as well as doing wonders for my geography.
Outside the media departments, the general view was that media was largely a clerical function - you booked space, you did not "plan" or "negotiate" it. It wasn't important, so media employees weren't important either and their salaries reflected it. The fact that in my first five years I never met a client was entirely typical. Inexplicably, agency bosses had missed the fact that 85 to 90 per cent of their income came from the media department and it took them almost two decades to wake up, but by then we had been able to take a lot of their business.
Where were clients in this? In the UK, marketing was a relatively new skill, imported from the US. Clients rarely argued about how much the agency was paid - they soon realised there was little point since they were banned by the media from rebating commission to clients, regardless of how little or how much work was involved. Agencies were, of course, delighted to support this restrictive media practice (the arrival of the procurement department was a long way away).
In client companies, if there was a marketing function, it would be incorporated within sales under the same director and he usually sat on the board. He (invariably a he) would regard his account director and the agency managing director very much as equals, not as suppliers. The key to their influence in the 60s lay not so much in personal relationships but in commercial TV. Such was the lack of alternative entertainment that a campaign with a memorable commercial could produce stunning sales increases. The retail trade hadn't yet consolidated and TV could be used to force distribution. With the best agencies seen to be integral to driving distribution and sales, this was the zenith of ad agencies' influence and the vast majority of clients were in no rush to change it.
What could possibly go wrong? Well, things were stirring in America: it didn't feel like a revolution but it proved to be a catalyst for one. I was to see this close up and it had a big effect.
I joined Kingsley, Manton and Palmer in 1964. It was already my fourth agency but it was where my proper business education began. The agency was new and on a hot new-business run. The founders were smart, feisty, PR-savvy and extremely agile.
AdAge came into our reception each week and I remember one day seeing on the cover a guy in his dressing gown - unheard of in the formal Mad Ave. His name was Norm King and, apparently, he'd started a time-buying business. He was saying agencies had gone to sleep, weren't paying enough attention to media and, crucially, he could buy 20 per cent cheaper than them. In the following weeks, insults and denials were traded on both sides and other start-ups began to announce themselves. They were dismissed as charlatans that were really specialists in barter.
A year or so later, my enlightened bosses decided it was time I saw the US scene close up and sent me off to New York. It was unforgettable: I was 23, being fast-tracked by my bosses and thought myself pretty smart. At the meetings that had been lined up for me with ad agencies and media owners, I could ask the intelligent questions but had no small talk. That was the least of my worries with the media buying companies: they talked and thought twice as fast as I and they talked a language I didn't understand. They spoke of "inventory"; "trading" and "offsets". One offered me $400,000 of cruise tickets and 80 sailing dinghies to contra for airtime. Another drove me round the streets of New York and every now and then would point up at a skyscraper and offer me the space above it on which, allegedly, he had the "space rights". For once, I kept very quiet knowing I was out of my depth.
At the next meeting with one of these media companies, I was ushered into the founder's office, except it was like no office I'd seen before or since: I had to make a long walk between statues of Greek gods on pillars and there he was, at the end, sitting on a throne behind a curved desk on a raised platform. One trip I didn't make was to Texas where, it was said, a certain media operator would have his clients collected from the airport in a stretched limo with blacked-out windows and, on the way into the city, they were entertained by pneumatic young women.
It was only when I returned to the UK that I realised they never discussed media in the way that a media professional would. The reality was that most of these guys were specialists in barter and many didn't care how they made their money. Certainly, some were getting big price advantages over the slow-moving agencies, but others were offloading junk airtime to naive clients.
Every three to five years, one of these companies would go spectacularly broke. I remember when one went down for $32 million: when the liquidators went to his apartment, they found an art collection worth, yes, you've guessed it, $32 million.
So, it was a fantastic soap opera, but would you give them your business? The smaller agencies often did so since the media service offered was free of charge and paid for out of "the extra savings negotiated". But with the ad agen-cies whispering in their ears, the big blue-chip clients wouldn't go near them.
So, although the concept of separating the media function from the rest of the ad agency was invented in the US, it was a disastrous start and nearly killed off the sector before it had properly started. The establishment didn't see the media agencies as inventors or revolutionaries, they saw them as cockroaches to be stamped upon.
Despite this, some good media companies did begin to emerge, breaking out of ad agencies and with a genuine interest in media. The largest in that first evolutionary period was Walt Staab's SFM, consisting of a media director, a media salesman and an entertainment industry specialist. Arguably, that's a combination of skills that would be even more relevant today.
Fortunately, in the late 60s/early 70s, there were more sustainable developments elsewhere in the world: over the border in Canada, in France and the UK, each with a different model -nothing yet was stirring elsewhere.
In Canada, the Simpson brothers had a company making low-budget wildlife movies but promoted strongly on TV. To them, entering media buying was an opportunity for vertical integration, diversifying and saving themselves money. In their case, they had the wisdom to hire media professionals and then to empower them. Their company, Media Buying Services, expanded into the US and, in 1969, they opened in the UK.
They appointed Paul Green from Garland Compton to run it and this was the UK's first media specialist. The business model was one that adland couldn't understand - MBS worked for free but took its cut once it had achieved an agreed weight of advertising. The purists argued that although it was costing the agencies nothing, the client was certainly paying, since MBS was being rewarded handsomely from the savings that should have gone to the client. The counter-argument was that MBS was buying so much better than the (small) agencies employing them, that even with MBS's cut, the client was still getting a better deal.
The debate raged on - the big agency media directors were shocked and intrigued. After a difficult start, a pattern emerged: many small agencies liked this offer - it was free and gave them expertise where they had none. But, additionally, there were clients who wanted to buck the restrictive practice of the commission system and avoid paying 15 per cent. In the early days, those clients tended to be those who were already producing their own creative work. A prime example were the independent record producers who produced compilations of greatest hits across a variety of stars, such as K-Tel and Ronco, which grabbed a big market share using huge TV budgets spent through MBS and then a spin-off, Time Buying Services. The ad industry establishment could complain as much as it liked but these were early signs of an emerging, and unmet, market need.
Meantime, KMP had gone public and, by 1971, I was pushing the founders to merge our media department with two other medium-sized, hot agencies (BMP and Geers Gross) and spin media out as a separate business.
After a lot of persistence, they agreed but announced that they were in the middle of an agency buying spree (not their best decision, it transpired) and so they didn't need to work with competitors to create volume.
So, at the age of 27, I was given the task of pulling the media departments out of six agencies and merging them into a new entity: The Media Department.
This was ludicrously ahead of its time. In 1972, no agency could imagine functioning without its media department - or admit that anyone else could do it better than them. So these agencies hated the idea but my bosses were adamant. Since these group agencies were my clients and TMD was, in effect, a supplier forced upon them, this was a scenario for some unpleasant politics.
However, I had built a strong management team at KMP (including a precocious 21-year-old, David Reich), who filled most of the key posts. We all had something to prove: we had to outperform in all aspects of media just to shut the agencies up. Gradually, we converted the sceptics and, by then, almost accidentally, had created the UK's largest press buying point.
Then disaster struck: the miners' strike and the three-day week. The Group over-reacted with their disaster scenario planning, demanding huge savings from their operating companies, and then each agency insisted on pulling its media function back in-house. The disaster made us: Reich and I were left running a company of 12 people and it was 100 per cent reliant on winning and keeping its own clients.
By 1976, the KMPH Group began to struggle - as is often the case in our business, going public was not right for its culture. The rationale for being in the Group had gone and I wanted my independence. Reich stayed to build TMD and I left to start CIA. Once split, we were extremely competitive - with me determined to catch them up, and when TMD sold to Carat, I found myself chasing Carat instead: two big media companies was the result.
By 1976, there were 16 specialist media companies - most making a lot of effort for not much reward. Their claimed combined billings was £32 million. There wasn't much improvement for several years: blue-chip clients just didn't see us as credible or saw splitting creative and media as resulting in extra work for them. CIA, after a dreadful first six months, won BMW and Gillette but that still didn't convert the doubters.
However, unlike the US, none of the media specialists here went broke and every single company was started by people with a media background. Despite the criticisms of the establishment, this provided stability and a greater degree of credibility. But if this was such a good idea, where was the breakthrough? What moved the sector from a 0.5 per cent share to an 85 per cent share? There were four key drivers: 1) Government involvement, 2) Technology, 3) Motivation, 4) Evolution of the industry.
The Government began expanding the media industry, awarding licences for commercial radio; then the Channel 4 licence was created and satellite TV launched. The regulators declared the commission system a restrictive practice (the agency establishment believed the media agencies had hastened its end - a heinous crime for which some of the old school would never forgive us).
Breaking the power of the print unions was also a crucial development. Eddie Shah, then Rupert Murdoch, were incredibly brave. My first non-executive director, Bruce Matthews, was the chief executive of News International at the time - his experiences ranged from excrement pushed through his letter box to death threats.
New technology was also hastening the pace of change. Satellites allowed media to go global, instantly and economically, be it the Financial Times or MTV. Cable opened up the subscription model as an alternative to free- to-air television.
Computers, the internet, mobiles, computer games - the list goes on and on, but the latest developments have produced the most profound change: the total empowerment of consumers and their involvement in the creation of both media channels and content. These changes to the media landscape have played a crucial role in the growth of media agencies. For specialists to thrive in any industry, you need scale, complexity and constant change and we now have that in spades. Against this backdrop, the media agency players had a more personal motivation for success. For whatever reason, the lack of status of media in agencies rankled more with the British media executives than anywhere else in the world.
We were rarely involved in client meetings, the account men would present our work and we had to hope he'd give the right answers when asked a question.
"I told the client we could cancel next week's campaign with no trouble."
"You said what?!"
Only 8 per cent of the agency's payroll was spent on media personnel.
Perhaps it was because we knew our media planning and research were world-leading and so our professional pride was particularly stung by this treatment. Whatever the reason, there were a group of senior, able media men with chips on their shoulders determined to prove themselves. Add a bit of entrepreneurial flair to the media guy's numeracy and organisational skills, and it was a potent mix.
We were a threat to the agencies' comfortable world and they were determined to stop us. They encouraged the media recognition bodies to turn down our applications for recognition, without which we wouldn't get any commission or credit. This was aimed to prevent us from trading at all, so there was a lot of bitterness.
The media independents - and that was what we were determined to be: independent - set up a rival trade association to the IPA, the Association of Media Independents. For a while, these feisty and much more agile operators led the agency establishment a dance. This perplexed the media directors in the agencies who were torn in two directions. Inevitably, however late in the day, the IPA had to fully embrace the importance of media and the AMI faded away, its job done.
Despite all these developments and all this energy and frustration, media agencies needed another helping hand to become a dominant force. Gradually, the market itself began to move towards them. In 1985, Ray Morgan was the media director of B&B, a wise industry figure who was presented with an agency merger with D'Arcy Masius (to become DMB&B) to which he objected. To the industry's amazement, he walked out with most of his media department - and nearly all the clients followed. No media man had demonstrated this level of "client pull" before. Suddenly, the sector had a string of packaged goods clients and another bunch of talent, including Christine Walker and Derrick Southon.
A wave of big agency breakaways and start-ups followed and most of them pulled in big blue-chip clients. They were described as The Third Wave and they included WCRS and Bartle Bogle Hegarty, and they accelerated the growth of the existing independents. They were hot agencies with a disproportionate share of talent and it was now clear to most clients that media agencies were a credible and viable part of the scene.
But still many of them wouldn't actively move to an independent - they were reluctant to take the initiative of separating media from creative. Still, by now, media agencies were becoming fashionable: anyone and everyone was starting one. If you'd just been fired, no problem - set up as a media independent. There were 85 companies just in the UK by this stage.
In 1988, Saatchi & Saatchi bought Ray Morgan & Partners, rebranded it as Zenith and merged its entire media department into it. This was a brave pioneering move that surprised the industry. At last, a big agency that could see what was happening.
In 1989, CIA went public with the specific goal of building a wholly owned international network. The first acquisition was not until 1993, after which progress was extremely rapid. Soon, Carat (which had bought control of TMD in 1989) and CIA were multibillion-dollar organisations and, within ten years, the old full-service agencies had given up the fight.
In 2001, Tempus/CIA sold for £432 million to a reluctant WPP.
This article was first published on campaignlive.co.uk