The Art and Science of Buying Media
The Art & Science of Buying Media
By Scott Harkey
My first step into the media business was just after attending Arizona State University. I was one of the youngest Media Sales reps in the industry, and was ready to prove that I deserved to be there. After working for a couple of small radio stations and learning the ins and outs of the business, I took a sales representative job with Emmis Communications, a large media conglomerate with television and radio stations across the United States. After a few years in the business, I was recruited for a senior sales position with CBS Radio, where I negotiated rates all day with the majority of the major agencies in Los Angeles and New York.
The reason for the quick glimpse into my background is to illustrate the importance of having a vast knowledge about how Television, Radio, Billboard, and Print companies price their inventory. I have seen one advertiser pay $10 and another advertiser pay $500 for the same commercial. If you don’t know what you’re doing and what you’re negotiating for, it can be a very expensive lesson. It is an upsetting fact, that many professional media buyers and business owners never learn how to buy media more efficiently and effectively for their client.
Most advertising agencies and traditional media buying firms purchase media on behalf of their clients, strictly by the numbers. And by numbers, I mean that traditional media buyers are looking at things like, demos, day-parts, CPM (cost per thousand), CPP (cost per point), GRP (gross rating points), ratings, etc. They are relying on these numbers alone to inform their client on whether or not they are getting a “good” deal. It is this traditional approach to media buying that makes sense for the agencies, and not necessarily the client.
Here is an example of how “most” media agencies conduct a media buy. The first step is a call to all media outlets telling their rep (just like when I was at CBS), “I need to buy your station and the market is at $150 CPP (cost per point)”. So now, every media outlet in the market submits proposals at $157 CPP, knowing they are in the ballpark. The national buyers will then call the top 5 ranked stations in the market and negotiates the rates down to about $144 – $151 CPP. My concern with this very traditional media buying method is this, when you buy and negotiate strictly by the numbers you are leaving money on the table, plain and simple.
I believe I have found a few of the best ways to negotiate with media companies. These tactics allow us both to get what we want. I will first find months, weeks, or even days when media suppliers have excess inventory. I will then find ways to partner up with stations to come up with promotions that cut through the clutter. I have found that the more you work with them, and the more knowledge you have about their business, the better deals you will make. It’s simple supply and demand. Buy when they have excess supply and you’ll get a better deal.
Another advantage to knowing their business is what I call the “station report card”. Every station in nearly every market has a revenue ranking report that comes out each month. Miller Kaplan is an accounting firm that calculates media revenue and produces a report every month detailing each station’s monthly billings. For General Sales Manager, this is their report card. What most people and potential clients don’t know, is that whether a station finishes 1st or 5th in revenue, they are still only separated by a few thousand dollars. If you can add an extra $5,000 to $10,000 to a station at the end of the month, and in turn take it from a competitor, that could be a big enough swing to get a Sales Manager a promotion or have them looking for a new job. Ultimately, this means that if they have the inventory, they are usually very likely and willing to give you a great deal you just need to know how to ask for it.
It always amazes me that most media buyers have never sold media! They have no clue how the game is played from the other side. It is similar to a professional quarterback never reading the opposing teams defense, whether it be from a playbook, from practice, or in the middle of a snap, an offense is always learning and studying the defense. How can you not do the same in media or anything that do? These amateur media buyers are primarily focused on buying media quickly to bolster their company’s bottom line and backing it up with “numbers”, which by now you should know is never going to get you the best deal. Most good media reps do not want to leave a mid to high six figure salary, to making $60,000 a year crunching numbers at an agency. This is why having an agency with a great media buying department can be one of the hardest things to find.
The best Media Buyer I have ever had the opportunity to work with was a guy named Don Bartolo. His company is DBM Media and is located in Newport Beach. His company is named after himself, Don Bartolo and his dog Max. Don used to be the General Sales Manager at a very large radio station in Los Angeles.
Don’s rates were 20% – 35% lower than any other major advertiser that had “good rates”. Don’s rates were almost 60-75% lower than other advertisers with “rate card” rates. That’s not even the best part; Don got all the extra bonus sponsorship opportunities. Free spots, cool promotions, 2-1 make good policy, only allowing 1-commercial in the stop set. He knew then what I have worked hard to learn over the years. He has a good feeling and pulse of what the stations inventory level is when he makes advertising buys. He also knows about the same accounting firm I referred to earlier, Miller Kaplan. If you think like a General Sales Manger when your buying media you can manipulate the buy into a win-win for the station and for you client or advertiser.
Media is all sold on supply and demand. An analogy I like to use is the airline business. If they don’t sell that seat on the plane before it takes off, they earn nothing. Airlines provide a “stand-by” option for a deeply discounted rate to ensure that most flights will be at full capacity. The “stand-by” option not only helps the airline company fill unoccupied seats, it provides added value to its customers.
ABOUT OWENS HARKEY & ASSOCIATES
At Owens Harkey we take buying media very seriously. Both of the agency partners have strong backgrounds in media buying and planning. Our ability to negotiate favorable media purchases on behalf of our clients is one of the driving forces behind our rapid growth. How the agency is compensated is based in the volume of media we are tasked with purchasing. Please note our method of purchasing media is not solely based on computer programs and statistics, it relies heavily on negotiations and “buying around the edge” which is much more labor intensive than traditional methods used by our traditional competitor.
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