True. Scarcely believable, according to many observers, but
definitely true. Anheuser-Busch, the Budweiser brewer, is dumping its
media buying agency, OMD, and setting up its own media operation. Called
Busch Media, it will be headed by Michael McGough and will open its door
for business on 5 November.
McGough, who will relocate to London from the Anheuser-Busch
headquarters in St Louis, Missouri, is not only an American with no
experience of the UK market but he's also an American with limited
experience of airtime trading in the US market - his background is
sports sponsorship. As a matter of urgency he's now looking to hire two
or three media specialists with the relevant UK experience.
Can Anheuser-Busch be serious? It's difficult to speculate as to the
precise thinking behind the move because it's so completely
unprecedented.
Granted, Nestle has an in-house agency called Fairfield Advertising but
it just handles press, hardly a major plank in the company's marketing
strategy. P&G traditionally does its own media negotiations but its
agencies actually administer the deals on a day-to-day basis.
The only real point of comparison is Anheuser-Busch's US experience.
Since 1992, the Busch Media Group has done the lot - research, planning
and buying, sponsorship - across all media. But this is no real point of
comparison at all because in the States, Anheuser-Busch has a budget of
around $500 million, not exceptional in US terms but enough to
give it negotiating leverage. In the UK, its budget is a relatively puny
£18 million.
So why is it even thinking of doing this in the UK? According to some
observers, the only way to make sense of the move is to view it within
the context of Anheuser-Busch's management philosophy, which has
something of the purity of its brewing philosophy: take a simple but
effective approach and implement it ruthlessly and consistently across
the board.
Tony Ponturo, the company's vice-president of corporate media and sports
marketing, states: "Running our own media has been very successful and
it also provides senior management with direct accountability. As a
company we like control.
"In assessing our goals as a company around the world, we have decided
that we don't want there to be a separation between what we do in the US
and the international side of our operations."
Which is fine. But some observers believe that there will be a heavy
price to pay in the short term. As one put it: "They will now need
expertise, systems and access to research such as BARB data. That, for a
start, is costly. Then they have to make it all work.
"The US market is simpler in some respects because it is an upfront,
fixed-price market. In the UK, we have a relative price system based on
spending commitments within long-term deals that are tricky to
administer.
"I'm sure they think they can go out and hire Tommy Timebuyer but if
they think they will be able to hire anyone of any consequence they are
kidding themselves.
No-one with the sort of track record and expertise they need is going to
drop their career to move on to this account. It will be a field day for
media owners. I'll bet people like Platty are rubbing their hands in
glee."
"Platty" is Steve Platt, the managing director of Carlton Sales, a
negotiator who's been known to intimidate the hardiest of souls.
However, on this occasion, he's not willing to oblige. "Good luck to
them," he says. "We will trade with clients in whichever way they want.
We will be as helpful as possible."
Which is a euphemism, right? No, he protests. Not at all: "Deals are not
just about volume. Negotiation is about what we have on the table and
what they are offering. Who's to say whether they can't get better
deals?"
Indeed. And it would also be dangerous to presume that the company has a
one-dimensional view of the media marketplace. It clearly hasn't. In
this context it also would probably be unwise to sneer at the sports
sponsorship backgrounds of Busch Media's senior staffers. They have a
vision of how TV is going to work in the future for a brand such as
Budweiser. It's not just about buying spot advertising in those
programmes watched by a predominantly young, male audience. It's about
"owning" whole media properties. It's about international programming
and sports sponsorship deals driven internationally from the US.
Admittedly, we don't play gridiron football or baseball on this side of
the Atlantic. But that would be to forget that Busch Media has
experience in negotiating at the highest level with real football's
rights holders and governing bodies - over World Cup sponsorship deals,
for instance.
However, surely none of that will be of much consolation when the
company's buying performance begins to take a caning. Let's just wait
and see, is Ponturo's response to that one.
"Taking a longer-term view, we hope that as the brewing business changes
and consolidates our business will grow. But dollar leverage isn't the
only factor," he says.
"We're not in any way pretending that we can waltz right in to the UK
market. We realise we will have to earn our stripes, but it certainly
won't be the objective to perform any worse than we have been doing."
