Most of the colourful ads that often annoy you in the middle of a favourite talk show or a cricket match have probably been brought to you with the help of a media buying house.
Establishing their stronghold in the late 90s, media buying houses revamped the advertising industry of the country to a great extent, changing the dynamics of how negotiations on ad spots are carried out between the companies and marketing managers of the media.
Media buying houses work on the principle of buying ad spots, on newspapers and channels, in bulk, and then selling them to their clients, which include FMCGs, telecom companies, etc. Thus, they essentially function as middlemen for the sale and purchase of the ad space.
These upcoming giants claim to have been able to stir waves in the advertising world by offering lower rates to their clients than what they would have been charged had they approached a TV channel or newspaper, or even an advertising agency directly.
This, they have been able to achieve thanks to buying ad spots in bulk, hence growing on account of the discounts offered thanks to purchases in huge volumes.
Consequently, the business models of many advertising agencies have been modified from a full-fledged agency to that of merely a design house, according to a marketing manager of a leading newspaper of the country.
However, speaking to BR Research, representatives of the advertising industry alleged that the low rates offered by media buying houses are largely played up and lot of discount is not actually offered to the clients.
"Companies are going to the media buying houses more because it is a fad than any other reason. The media buying houses do not negotiate extraordinarily low rates for spaces with TV channels and newspapers, and even charge a commission fee from them. The net result is that the clients are not saved any more money compared to what they wouldve paid had they dealt directly with the media," said a representative of an advertising agency.
Consequently, many clients of media buying houses, particularly smaller companies, are reverting back to the conventional advertising agency as they don see any monetary benefit in using the services of a media buying house.
Yet, media buying houses also offer other services to their clients such as media planning according to their target market and appropriate prime times, etc which are of considerable benefit to the companies, particularly the larger ones such as the FMCGs.
But not all media buying houses do that and there are a few wolves in sheeps clothing that continue to dupe clients.
Companies need to be wary of when buying ad spots and should not accept the rates from any agency or media buying house at face value.
They should rather analyse the figures carefully, particularly in comparison with competitors rates and those of media channels and newspapers as well. Who knows, the best rates might be the ones they themselves negotiate directly with the media.
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