Online Remains An Inefficient Buying Medium
Panellists at the launch of MediaTel Group’s online trading system, DELTA, bemoaned the labour-intensive nature of the online buying process saying that it is both wasting talent and leading to reduced net margins.
The panellists, Adam Freeman, commercial director of Guardian News and Media, Greg Grimmer, partner at Hurrell, Moseley, Dawson and Grimmer, and Nick Suckley, co-founder of agenda21, told the BBC’s Torin Douglas how online is lagging behind traditional media when it comes to buying efficiency. Suckley highlighted this with the comparison that a typical online buyer would bill around £1.4 million annually compared to £10 million for a TV/Press buyer which naturally leads to high headcount in the digital arena.
Grimmer outlined this difference, citing being asked for a new fax machine when he first joined Zenith Optimedia’s digital arm, Zed, and being astounded that the practice of booking online space via fax is still the norm today. Grimmer pointed out that administrative inefficiencies meant that while gross margins may be higher in online, net margins – once head count and overheads are taken into account – are substantially lower.
Suckley also made the point that the current online buying structure is a waste of new talent coming into the industry, saying “it’s a terrible career for bright graduates coming into digital” due to the estimated 70% of time being spent on admin. Suckley felt the net result of excessive admin meant that agencies struggle to add value to their clients above and beyond meagre co-ordination of the buying process, “media owners add value, media agencies do not” with regards to digital. Freeman agreed with this, adding that media owners have more ability to contribute with regards to creativity in the online space.
The panel also made the point that companies should not place too great an emphasis on technology, with Adam Freeman believing that “technology doesn’t give you [companies] long term competitive advantage”. Unanimously, the panel felt that WPP’s acquisition of 24/7 Real Media was an error with regarding this point. Grimmer also advised companies not to look at internal technology solutions as an answer to business problems, outlining that this approach is “fraught with danger”.
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