MEDIA & MARKETING: The future looks set to become even more difficult for smaller indigenous agencies

IT’S A SIGN of the times in the world of Irish advertising. Not so long ago, Carlsberg television commercials were created in Ireland with Irish drinkers specifically in mind.

The new Carlsberg “Spaceman” TV ad is a global campaign that has been rolled out in 140 markets at the same time. These days everything is global, with only the media buyers in Ireland making a margin on the advertising spend.

The ongoing shift of big-brand creative from Dublin to London or further afield is a worrying trend for Irish agencies. The ad industry gathered in Dublin last week for an inaugural awards programme organised by trade magazine Irish Marketing Journal and The Brainfood Store.

The Agency of the Year and Campaign of the Year awards were won by media buyer Mindshare for its media planning for the Bord Gáis Big Switch campaign.

While pessimism was strictly off the menu as more than 500 ad agency executives and media owners schmoozed, one couldn’t help but notice the dearth of indigenous ad agencies.

Mindshare, owned by WPP plc, is one of the big international media groups which dominates the Irish advertising business.

The others are Starcom Mediavest, part of Publicis Media, OMD, part of Omnicom Media Group, and Carat Ireland, part of Aegis. These four companies account for the majority of advertising spend in Ireland by big consumer brands.

Their turnover, largely accounted for by buying media space, declined to €347 million in 2009 from €413 million in 2008. As they seek to protect their market share, they compete fiercely for accounts, offering the sort of deals on price that smaller ad agencies cannot.

Mindshare managing director Bill Kinlay believes the future is going to become more difficult for the smaller players in the sector.

“The business has been consolidating for many years and will continue to do so,” he says. “I don’t mean to sound negative but I think media has become a business for the bigger groups. It’s all about volume these days..”

Kinlay says that when a media buyer is trading with RTÉ, TV3 or a newspaper group, ability to access funds and pay bills on time is just as important in the negotiations as actually buying the ads.

“The credit facility that we have gives us the edge over the smaller guys,” says Kinlay. “In a lot of pitches, 60 days and 90 days payment terms by the client are par for the course. RTÉ and TV3 only give 30 days’ credit, so the media buyer has to be able to fund that business. Cash flow and cash management and having access to credit lines is now a very important part of business.”

Volume brings other advantages for large media agencies too, such as being able to negotiate better discounts with media owners. The flip side is that big media buyers sometimes over-promise to clients, especially new ones, the discounts they can secure on space and airtime.

“Media agencies have sold ourselves too cheaply for too long,” Kinlay admits. “We have dropped our commissions and fees because we had to do that to win business, but we have gone too far.

“We have to be proud of what we do and stand up for the good work that we do and be properly remunerated for it. We need to stick to our guns on our fees and commissions if we are going to attract the right talent.”

Kinlay is critical of some media auditors who are giving clients unrealistic expectations about the price they can pay for advertising.

“The quickest way to push down prices is to put your account out to pitch, but there is a limit to how far things can go. Good media buying is about targeting in a clever and strategic way and then securing the best price.

“There’s a difference between reaching the right people at the cheapest price and just any people at the cheapest price.”