It's over. At last. The media pitch (in terms of UK billings at least) to end all media pitches. Last week, the UK's largest advertiser, COI, centralised its £250 million-plus media buying business into M4C, a unit specially created by Group M.
The successful pitch was led by Nick Theakstone, the chief executive of Group M, Jane Ratcliffe, MediaCom's UK chief executive, and Mediaedge:cia's deputy managing director, Alex Altman. They are expected to play a large part in constructing a fully function- ing M4C operating unit based at Group M and MediaCom's Theobald's Road offices.
It is believed that both Ratcliffe and Altman will be expected to "double hat" - becoming the chief executive and the managing director respectively of M4C while retaining their current roles.
It was, in some senses, an epic pitch, and not just because of the huge size of the account. It was quite simply the biggest single- territory media centralisation ever held in this country.
But it was also an epic in terms of timescale (28 months, when you include internal evaluation processes). This was due in part to the need to harmonise the timescales of existing contracts, with some being extended so that they all terminated at the end of March. The new contract will take effect from April.
It was also in no small part down to the complexities of the public-sector procurement procedures. But, in some respects, the actual pitch process, once interested parties were invited to make their initial submissions back in July, was not the gruelling slog some outsiders predicted it would become.
Though the pitch, led by COI's deputy chief executive, Peter Buchanan, was held for the usual reasons of providing greater "efficiencies", it lacked the worst elements of "pitch abuse" that we've seen in one or two mega media pitches recently. As one participant puts it: "The COI team played a straight bat throughout the entire process. It was a well-conducted pitch - as you'd expect from a public organisation like COI."
1. In September 2007, Buchanan announced that COI had commissioned the former Radio Advertising Bureau boss Douglas McArthur to undertake an independent review of its media buying systems.
His report, delivered in January 2008, concluded that COI's media buying, split as it was across several agencies by medium, didn't always deliver joined-up thinking. This had implications not just in terms of a crude measure such as price but also made it hard to pursue the effective communications that strategic integration can deliver, especially with digital becoming an ever more crucial part of the mix.
2. COI's media buying was previously spread across Carat (TV and cinema, representing 41 per cent of spend), MediaCom (press, 25 per cent), i-level (online, 13 per cent), Starcom (radio, 13 per cent) and Posterscope (outdoor, 8 per cent). When the pitch process was formally announced in July, the incumbents had formed themselves into three supergroups to pitch for the centralised business. The WPP agencies were an obvious fit, as were the two Aegis-owned agencies, which branded their offering as Unify; while Starcom and i-level formed a joint venture called Smile.
3. McArthur's report formed the basis of the brief, with agencies being left in no doubt that COI was not just seeking greater efficiencies but was also keen to fulfil a sophisticated leadership role in the UK media market.
4. All three supergroups were shortlisted in October and submitted full pitch documents in November. There had been speculation at one point that Omnicom Media Group would also put itself forward but its challenge failed to materialise. The original COI timetable had pencilled in a decision date of 26 January.
5. Coincidentally, in July, publication of its annual report revealed that COI's offline media spend for the year to March 2009 had risen 35 per cent year on year to £211 million, with a further £40 million being spent online.
6. COI is the biggest spender in the UK media market (in 2008, it overhauled Procter & Gamble, which spends upwards of £170 million), though this could change if an incoming Tory administration begins clipping its wings. It has pledged, if elected, to reduce COI's total budget by up to 40 per cent. The current government has called for cuts of 25 per cent.
WHAT IT MEANS FOR ...
- This just confirms WPP's unrivalled scale and leverage in the UK media market. According to Nielsen, Group M was responsible for £2.266 billion billings in 2008, a 17.5 per cent share of the Advertising Association's total of £12.99 billion in above-the-line advertising billings.
- The COI win will push this share above 19 per cent of total adspend. However, its share in the league of the top-six holding companies share of media (excluding independent buying agencies and much regional media) was 37 per cent in 2008. With COI factored in, this share rises to greater than 40 per cent.
- Group M now has a living, breathing virtual agency at its very core. This could pave the way for other ad hoc cross-group co-operative ventures.
- It also represents a boost for WPP's digital media capabilities. To some observers, this was a question mark hanging over the group during the pitch - M4C will now be expected to build up a huge digital media resource to service the COI account.
- I-level and Starcom MediaVest claimed that the decision will "not halt momentum". However, it seems to be a huge blow to i-level in particular - COI business is thought to have represented between 40 and 50 per cent of turnover. One way or another, it now faces the prospect of losing some of its top staff - a process that may be accelerated thanks to the fact that 2 contracts are covered by transfer of undertakings protection of employment (Tupe) legislation.
- Carat has also lost the £94 million TV buying task. Expect the agency to be its usually aggressive self in new-business pitches as it attempts to claw back the lost billings.
- In the short term, not a lot. The most important deals have been done for 2010. Longer term, it makes Group M an even more fearsome presence in the newspaper and TV markets.