Media: All about ... Group trading in the digital arena

Negotiating deals in digital is becoming a group effort, Alasdair Reid says.

Agencies tend to treat a medium differently when media auditors begin monitoring it closely. For good or ill, this changes the rules utterly and has fundamental implications for the way that a sector is planned and bought.

So it is perhaps no coincidence that the major holding companies - the latest being WPP, last week - have been setting up group trading structures in the digital space at precisely the same time as the auditors have been upping their game. According to some sources, the auditors are uncovering huge differences, agency by agency, in the price paid for comparable deals.

Comparable deals? Such talk is like a red rag to a bull for some digital agencies, especially the old-school operators that have been around since before the first dotcom crash. They maintain the internet is the ultimate transparent and accountable medium - and you get precisely what you pay for, especially if it's measured in terms of the response rates an ad attracts.

So this is a market where size, from a buying point of view, doesn't really matter. In fact, the bigger you are, aren't you more likely to make the wrong decisions, because buyers with big job titles tend to ride roughshod over the best-laid plans of your average humble planner. Big buying points, so the critics say, are often tempted to take expedient shortcuts. Almost by definition, they focus their efforts on a handful of the bigger sales points.

However, the structure of the digital advertising world is changing rapidly, and group trading is very much on the agenda.

1. Last week, WPP's media investment arm, GroupM, appointed its first head of online trading - Robin O'Neill, currently the media director of Media.com, the digital arm of another WPP media agency, MediaCom. O'Neill will conduct central negotiations on behalf of the three main WPP online divisions, MindShare Interaction, MEC Interaction and Media.com, reporting to GroupM's chief operating officer, Nick Theakstone.

Theakstone says: "GroupM is trading really well across the other media. It's now time to take the systems we've developed and bring them into the online market. The key to success is getting what is right for the client. It's about delivering flexibility and innovation."

2. Aegis claims to have by far the most established and successful group-trading structure in the digital space - and also the best co-ordinated at an international level. In the UK, Andy Cocker is the director of online trading, reporting to the group's trading supremo, Steve Platt, head of media at Aegis Media. Cocker oversees negotiations on behalf of the two Aegis digital media brands, Carat Digital and Diffiniti.

Aegis claims to be the biggest customer of the world's dominant digital media owners - Google, Yahoo! and MSN. The benefits are not just measured in terms of cost, Aegis insiders say. Standard terms require advertisers to give major media owners 48 hours' notice of copy changes. Aegis clients are offered a turnaround time of two hours.

3. Omnicom created a centralised digital unit within its OPera media-negotiation structure in June but, so far, handles negotiations for just three of the group's many digital streams - the digital billings of mainstream buying agencies OMD and PHD, plus those of the specialist digital unit, Agency Republic. Other Omnicom agencies, including Agency.com, Tribal DDB, Proximity and WWAV Media, have declined to participate.

Trading is handled by John Overend and Marc Bignell, OPera's joint managing directors. Omnicom forecasts that a steadily increasing share of trading will go through six media owners. Though it acknowledges that price isn't the whole raison d'etre for centralised negotiation units, the company believes that if agencies don't leverage their entire billings weight, they will ultimately be marginalised.

4. Interpublic has yet to add digital to Magna Global, its centralised negotiation unit, though sources say the group's main media agencies, Initiative and Universal McCann, are evaluating future options. Market intelligence is regularly swapped on an informal basis, though care is taken to preserve client confidentiality. Digital is headed by Jason Carter at Universal and David Schruers at Initiative.

5. Publicis has as yet no group-wide media structures but there's a joint negotiation arrangement for Starcom and Starcom MediaVest. The head of digital is Matt Simpson.

WHAT IT MEANS FOR ...

THE DIGITAL MEDIUM

- Critics of centralised negotiation units say they help to "dumb down" what should be the most intelligent and flexible media option ever invented. Fewer than half-a-dozen media owners command well over 50 per cent of advertising spend in the digital arena - and centralisation on the buying side will only serve to increase that dominance.

- For the purist, this dependence on a handful of media owners is entirely oweing to a lowest-common-denominator approach by agencies. To be more blunt: lazy thinking. Group negotiation units will only encourage more of this - they'll tend to feel most comfortable talking to those media owners that are big enough to understand the language of leverage.

- This is hardly good news for the cause of diversity and plurality in the medium as a whole.

ADVERTISERS

- Agencies argue that we're entering a new phase in digital advertising, where branding campaigns (which, by definition, are not instantly measurable in terms of response rates) will become increasingly important. In this new world, having leverage is, at the very least, a common-sense insurance policy when it comes to ensuring that advertisers get the best possible value.

- Increasingly, only the bravest advertisers will argue otherwise.

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