Cutting costs in sales: Outsourcing and automated trading move up the agenda

The belt-tightening continues in earnest in adland. Last week, 3, the mobile operator, dumped its creative agency Euro RSCG and loaded all of its work into Glue London, a digital agency.

Virgin Media did something similar. The company funnelled all of its creative work into RKCR/Y&R, ditching Rapier, the agency that produced those ads with nice Uma Thurman.

There was interesting news from Procter & Gamble, too. The world’s biggest advertiser announced it would “renegotiate” its media spend worldwide.

A.G. Lafley, the company’s chief executive, described his aim like this: “Whole industries have walked away [from advertising]. So everything is getting renegotiated, and we want to be ahead of the curve.

Given Sir Martin Sorrell’s repeated inisistence that the cost of traditional media is close to an all-time low, it remains to be seen whether P&G is lagging behind the curve, or simply anticipating further declines.

One thing seems certain. The pressures building up within adland are going to force media owners to become a lot more intelligent about how they handle the costs of selling advertising.

We’ve already seen this happen in traditional ways –- via wholesale restructuring of commercial teams at both News International and DMGT.

Last week, Northcliffe confirmed that it might take things a step further -– by outsourcing all non-classified ad sales on its regionals to Mediaforce.

According to Media Week, Mediaforce already handles outsourced media sales for parts of Johnston Press and Guardian Media Group. Here, then, is a company that could end up having a good recession. Beneath Mediaforce’s coy refusal to name its clients ouright, something significant appears to be taking shape. 

Beyond restructuring and outsourcing, the next question is the most interesting of all: how much old-fashioned ad trading can be automated?

In the current market, every cost saving achieved in the sales department is a cut that doesn’t need to be made in editorial. The incentives for automation are growing all of the time.

It’s encouraging, then, to hear that News International is currently interested in the electronic trading platform used by both media owners and agencies in Finland. At least one major UK-based media network is believed to be similarly intrigued.

Trading platforms only make sense if they attract a critical mass of participants. The chances of that happening can only increase as the climate in adland grows colder.

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