“Is this fair? Not really, because the media buying houses put in their best effort in the first round even after being dictated the channel mix, the time slot mix and the top positions. The winner of the competition is, of course, the one with the extraordinarily low rates that they label as CPRP.”
The advertising and media industry has had three main stakeholders; TV channels, advertisers, and media buying houses – it really is the media planning and buying houses but planning takes a back seat in the context of Pakistan. In recent times, the adex for TV has been disrupted by digital. But is it the only actor in polarizing the industry? No. There have been forces at play since decades working to distort the ecosystem of advertising.
Back in 2018, I wrote an article titled, “Battling the Media Demons”, published in Annual 2019 of Synergyzer. In that, we discussed the industry issues focusing on the two stakeholders, TV channels and the media buying houses. This time, the focus will be on advertisers. As we discussed the last time, the top two media buying houses were playing the low rates card. The result of it was that the revenue gap between the top two and the rest of the media buying houses kept on increasing.
Now, almost all big advertisers have chosen to sign up with the top two media buying houses.
“One major FMCG advertiser shifted to one of the top two media buying houses, which brought to the forefront the role advertisers are playing in polarizing the media planning and buying industry in Pakistan.”
EXTRACTING EVERY DROP
Recently, one major FMCG advertiser also shifted to one of the top two media houses, which brought to the forefront the role advertisers are playing in polarizing the media planning & buying industry in Pakistan. This event has shed light on an under the radar practice that was being followed for a decade now and has recently begun to get more popular with the advertisers. This practice shows the extent the advertisers are willing to go to make matters worse for their own benefit.
Informally said, this practice by advertisers employs the concept, ‘extract every drop’ when selecting a media buying house.
So what happens is that the advertiser floats an RFP (Request for Proposal) which is supposed to be filled by the media buying houses. Technically, it is supposed to be a grid sheet that the media buying house fills but the advertisers have started giving their own expectations for percentage of spots from top tier channels, percentage of spots from prime-time slots, percentage of spots from premium positions, etc. Asking for predefined percentage as requirements restricts all media buying houses from presenting any personalized plan. As a result, they only get to tell the advertiser the price they will charge them for.
“It is disappointing to see that advertisers do not even consider other qualitative measures, which can decrease the efficiency of the TV plan if not used properly.”
When the media buying houses return the RFP, the advertisers tabulate and share the results online, available for all to see. This gives the media buying houses a chance to see how much they lag behind which obviously is a wide gap considering the top two have always played the low rates game. Thus ends the first round.
The advertiser continues the practice for two more rounds encouraging the other media buying houses to close the gap and lower the cost per GRP. It is disappointing to see that they do not even consider other qualitative measures, which can decrease the efficiency of the TV plan if it is not used properly.
But is this fair? Not really, because the media buying houses put in their best effort in the first round even after being dictated the channel mix, the time slot mix and the top positions. The winner of the competition is, of course, the one with the extraordinarily low rates that they label as CPRP.
At the end, it seems that even with this stakeholder, it is only the rate race that matters. And now, every year, more and more advertisers are following suit.