Cutting the Gordian Knot: why media needs a single global offer
Opinion
How a legend from antiquity could change the narrative and help safeguard the financial future of the established media sectors.
In 333 BC, Alexander the Great had begun his epic conquest of the Persian Empire, when he and his army arrived at the town of Gordium in modern Turkey.
In the marketplace stood an ox cart tethered to a post by an intricate knot. Legend has it that King Gordias who had placed it there declared that anyone who could unpick the knot would become ruler of all Asia. Famously Alexander weighed up the knot, withdrew his sword and sliced it in half with a single stroke.
This 2,000-year-old legend has survived because for countless people since it has proved an inspiration. Look at a complex problem. Get to the heart of the matter and execute…with force.
For over 20 years, the established media sectors have done a noble job of challenging the revenue threat posed by the digital platforms. These sectors have consistently produced award winning studies demonstrating superior ROI when it comes to building brands for their customers. At seemingly every conference Byron Sharp, Binet and Field and Mark Ritson are quoted to make the case for greater investment into established sectors.
Despite this, last year it was reported that Sir Martin Sorrell had claimed that “old media” had lost the ad war. “Global media is about $900bn. Global digital is about $650bn of that. The numbers never lie.”
Buying more important than planning?
Michael Farmer recently charted the revenue performance of 21 of the world’s biggest advertisers over the last 15 years whose ad dollars have helped fuel the platforms’ growth, Anaemic would be a kind word for said performance.
Obviously, advertising is not the only factor in their revenue story but given the amounts invested, revenue tracking way lower than comparative GDP is of serious concern.
Why has this not stemmed the revenue drift to pure play digital?
One of the unavoidable advantages of the global tech giants is that they are global players in a globalised economy.
For multinational advertisers who employ teams of global media specialists, the attractions of doing single global deals is obvious. An opportunity to secure the best rates by doing multi market deals at scale. And then enjoying consistent reporting of results from common dashboards that invariably show the contribution made by the tech giants’ ad offering.
Tellingly clients often still refer to media agencies as “the buyers”. The fact that so much is spent auditing media spend underlines the importance of relative price to clients. There are countless articles that propagate the hypothesis that buying is now more important than planning.
An obvious consequence of global deals is that the ad budgets available for allocation in national markets are smaller once monies have been committed to global players. All of the planning arguments in the world cannot mitigate the consequences of global spend commitments.
A dream team
So how can companies that exist at a national level hope to compete with global entities who make it very easy and seductive to do business?
One simple answer is to approach global clients with a single global proposition.
Imagine for one moment that national TV or radio broadcasters or DOOH and cinema players approach the Top 20 global advertisers with a single annual deal for all the client’s key markets. Global TV ad revenue is about $130bn according to some estimates. Representing 15% of global ad spend affords real leverage.
Pick your own dream team of industry leaders but imagine the likes of Dame Carolyn McCall, Stephen Miron or Karen Stacey turning up to discuss a global TV, radio, cinema or DOOH deal with Marc Pritchard of P&G. The opening gambit is inevitably an ask for increased revenue for their proven sector in return for competitive pricing in one global deal.
The efficiencies for both parties would surely be appealing.
I do not underestimate the massive complexities. I have run industry bodies in the UK and know well how difficult it can be to get fierce competitors to collaborate for the greater good. But I also know that it can be done if the vision and the will is there.
What about competition and antitrust issues? Again, I am sure there would be immense challenges. But this would only serve to highlight the comparison of highly regulated sectors vs global players who seem impervious to most regulation.
Huge risks for huge rewards
Global collaboration at this scale would inevitably lead to collaboration in other areas.
I have mentioned how the Tech giants can marry competitive pricing with “proof” of effectiveness. A global version of the TV industry’s Lantern panel would be invaluable in any worldwide deal conversation for example.
Equally a global collaboration might lead to conversations with device manufacturers. Currently streamers enjoy a huge advantage with a dedicated button on smart TV remotes. Is it possible to incorporate a dedicated button for the national broadcaster in each market?
These are massively complex issues. But then taking huge risks can bring huge rewards. And such an approach wouldn’t preclude these sectors from continuing to do the sterling job they do in protecting and often growing their current revenues.
I came away from the recent Advertising, Who Cares Summit with a sense that many of the issues facing the industry are so complex it is almost impossible to know where to start.
The time to be bold
For Alexander, doing the simplest thing with force and power worked. He looked at the problem, took the most direct and obvious action and went on to create the biggest empire the world had seen to that point.
Do the established media have a champion willing to take equally bold action? Is there a sector that can approach a global advertiser with a single global offering?
If we value thriving media sectors who produce great content and brand safe environments it has to be worth exploring at one of the numerous global industry summits.
Simon Redican is a commentator and consultant on the advertising industry and former CEO of PAMCo.