Following up on our story that GroupM announced local broadcast buying units at its Mediaedge:cia, MediaCom, and MindShare media agencies will be consolidated into two separate teams called Team Matrix and Team Motion (1/30/08 RBR #20), we observed this follows similar moves as with WPP’s Team Detroit for Ford Motor Media and Chrysler consolidating at PHD as well. For national spot, this is a pretty big story, from three aspects:
* For the mega agencies to run a national spot TV/spot radio group, it is exceedingly expensive to manage and maintain in the way of paperwork, real estate, data processing, research, training, churn–human factors. As well, media agencies work on very narrow commissions and the overhead is high. This is likely why the consolidation has been initiated. In general the expense of running these departments on the agency side in general could be one of the reasons national spot has been getting hurt lately.
* This is also going to create a sense of anxiety on the sales staff side, too. The management at the stations might like this, because it forces consolidation on the broadcast side, too. Instead of having all of those different folks calling all of the different agencies, there are less agency contacts to call upon. Salespeople on the staff will now be jockeying for position soon as to who will be the point person to call at these new consolidated agency teams.
* By consolidating on both sides, prices will be driven lower. It will be good for clients getting lower prices. It might be good for stations because it creates a central figure that can make decisions quickly without red tape, but pricing will get hurt which is not good.