Procurement in media

November 21, 2019

Within many companies, the marketing departments need assistance with squeezing the utmost value out of their advertising budgets, and procurement teams that specialize in media are often called upon to assist them with making those decisions.

Media procurement normally involves the practice of acquiring the time and space for advertising across one of any number of media platforms. This includes print media sources like newspapers, magazines and direct mailings, mass media sources like television and radio, and also a wide array of new media advertising outlets like search engines, social media sites, digital displays, emails, and even the miniature commercial snippets that often appear beginning or during videos on media hosting sites like YouTube.

In most cases, the first step in media procurement is the development of a research plan that analyzes the multifarious factors that contribute to the selection of a suitable audience for the advertising campaign. Factors frequently include audience demographics data like geography, age, gender, race and ethnicity, and spending habits, all of which are weighed against considerations like the price attached to reaching the targeted audience through each media sources, and the total campaign budget accessible for doing so.

Perhaps the most frequent concern for modern media procurement specialists is reliably identifying whether or not they are truly getting their money’s worth when acting on behalf of the organizations they represent. When all of what was considered media was contained within a handful of national newspapers, magazines, television programs, radio shows, and the local publications and programs that everyone within a certain geographic radius was familiar with, there existed far less uncertainty over the reach and effectiveness of the campaign and the receptiveness and responsiveness of the targeted audience.

Due to the amount of specialization required to run contemporary advertising campaigns, companies often outsource the responsibility for placing direct media buys to external media agencies. In turn, the procurement team of the organization negotiates a contract with the media agency, and relies on the agency to conduct the research required to make the best purchasing decisions, and also to place direct buys with media suppliers, including the bids for digital ads mandated by many web-based media platforms.

While it is theoretically possible for an in-house team to place media buys, most firms are unable to justify the increase in personnel required to effectively monitor media and consumer engagement across multiple sectors and platforms, nor can they rationalize the expense required to obtain and maintain the technology and software required to collect and track media data at a high level. Therefore, engagement with media agencies has become essential for most businesses that wish to run complex advertising campaigns.  

21st century challenges

In the early 21st century, with the ongoing fracturing of audiences due to a multitude of factors, opportunities for reaching target audiences have become laser-focused, but the means by which audience members can skip or ignore advertisements have become equally plentiful. Moreover, the proliferation of data, ostensibly designed to aid in meeting the challenge of determining whether or not the audience has been effectively reached, has also opened the door for new forms of fraudulent activity designed to mask the ineffectiveness of fruitless advertising campaigns. As such, media procurement leaders need to be aware of such schemes in order to make truly helpful advertising purchases for their organizations.

When it comes to modern media procurement, an assortment of potential hiccups exist that would have been unfathomable 20 years ago, and one of them is the speed with which organizations expect to be able to alter their marketing trajectories in response to changes in any number of market forces. Yet, contracts with media agencies are often written in a restrictive fashion that limits the responsiveness with which modern businesses would wish to operate. In fact, PepsiCo opted in 2015 to eliminate its entire marketing procurement department in the hope that the company would be able to make decisions with greater speed.

Another reason Pepsi was convinced to move away from maintaining its own media procurement team is presumably because of the overemphasis procurement commonly places on cutting costs. While a parsimonious disposition might be a valuable asset when it comes to procurement practices within other industries, where finding the most inexpensive but effective material can result in a premium product being made at a reduced cost, in modern media procurement the desire to take shortcuts by prioritizing low expenses over long-term brand investments can result in ill-advised decisions.

Examples of this can include attaching advertisements to websites or YouTube videos that display content detrimental to the brand or the organization, or focusing SEM strategies on keywords that are searched for far less frequently than others that come at a greater expense, but which would certainly yield a higher volume of search engine traffic. Furthermore, the specificity and privacy with which advertising is now delivered to single individuals on the screens of their phones and computers can also make it difficult to investigate whether media agencies have delivered the desired advertisement to the sought-after audience at the requested time.

Bad actors exposed

In 2016, the Association of National Advertisers published a report that exposed several clandestine dealings within media procurement, not the least of which was the practice of procurement teams placing orders with agencies that then purchase media that is not in harmony with the strategies of their clients. In fact, media suppliers routinely provided media agencies with what amounted to rebates in the form of inventory credits, and media buyers were often motivated to steer their clients’ purchasing decisions toward options that would directly benefit the buyers. The ANA also unearthed the problem of media agencies holding equity stakes in media companies, a practice that produced obvious conflicts of interest that resulted in agencies benefiting themselves at the expense of the clients whose interests they were contractually obligated to serve.

Because of the clear problems created by scenarios like these, we recommend that media procurement teams demand absolute transparency with the agencies they hire in order to ascertain that they are truly being provided the best advertising arrangements possible for the money they are providing, and that they are not being rerouted toward advertising options that are more financially advantageous to the media suppliers and agencies than they are to the brands those procurement specialists represent.

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