Jeremy Lee on Media: The real power of spending

Jeremy Lee
Jeremy Lee

The latest focus on COI adspend has serious implications for brands, media owners and agencies.

The political football that is the COI was once again in the headlines over the weekend. This time it followed the BBC's use of a Freedom of Information request and subsequent discovery that the government communications organisation had increased its adspend by 40% to £253m last year.

Surely few marketers - let alone consumers being bombarded with a growing number of public information messages as the June election deadline looms - would find this surprising?

Mounting its defence, the COI claimed to have secured a reduction in media costs of nearly half over the same period. This increased efficiency, if true, means that, in real terms, the actual increase in year-on-year government communications spend is far greater than the 40% headline figure suggests.

While politicians of every party will continue to kick about the issue of the COI's future levels of funding, in an attempt to make political capital in the run-up to the election, on a more local level, brand owners should take note - and not just because the COI, as the UK's biggest advertiser, already distorts the market.

The COI has just, for the first time, centralised its media buying account into one agency - Group M, which negotiates on behalf of all parent company WPP's media clients. This consolidation, which coincided with Unilever renewing its contract with the agency, means that Group M now controls about a third of all UK media-buying spend.

ITV's share of net advertising revenue stands at about 38% for its ITV1 channel, but it is bound by numerous statutory restrictions. Given this, grumbles have arisen - from media owners, at least - that Group M should itself be subject to an investigation by the Competition Commission, or other regulatory bodies, because it, too, now wields excessive power.

This is mischief-making, perhaps, as it would be a brave media owner that made a stand. Nonetheless, there is some irony in that it may have taken the government's centralised ad budget to tip this balance. It also compounds another irony - that WPP relocated to Ireland in 2008 to minimise its UK tax bill, but now has a central role in communicating the need for UK businesses and consumers to complete their tax returns or face the consequences.

So what does this mean for advertisers? Potentially, quite a lot. While consolidation (usually) leads to lower costs, there are other prices that advertisers may end up paying.

For example, the seasonal stand-off between media agencies and media owners as they thrash out terms, which usually results in some agency groups withholding clients' spends, could mean some advertisers'communication is withdrawn from certain channels until deals for other advertisers within an agency can be agreed.

This trend has been building for years - and with the implicit approval of advertisers. However, the creation of these 'super buying points' means that they could be at least partly responsible for sacrificing their own communication destiny for cheaper media prices.

More profoundly, for those that appreciate the plurality of commercial media that gives consumers (as well as advertisers) choice, the effects could be increasingly dramatic.

Financial pressures from more powerful agency buying points, to which media owners have become increasingly beholden, could result in yet more consolidation among them, with some of the weaker players disappearing altogether. And there's not much to celebrate in that.

Jeremy Lee is associate editor of Marketing. Read his blog at marketingmagazine.co.uk

30 SECONDS ON ... the COI

- The Central Office of Information was created in 1946, to take on the communications that had been handled by the Ministry of Information during World War II. Its initial focus was on food and nutrition (as rationing and shortages continued), health ('Coughs and sneezes spread diseases'), civil defence (the Cold War) and rebuilding priority industries.

- The COI's remit was expanded in the 60s to include promoting Britain abroad, and the spread of TV into the mainstream gave it a fresh platform for its public information campaigns, such as the new 'Drink drive' activity.

- Campaigns from this era still widely remembered today include the comic 'Joe and Petunia' seaside-safety ad. In 1969 there were 34,000 free screenings of public information films.

- A change of tone in the 70s brought shocking realism to some public information films, while the use of stars and cartoons brought light relief to others, such as the Green Cross Man road-safety ads and 'Charley' the cat offering advice to children.

- The 80s brought unemployment and training campaigns and a fresh health push to educate the population on the threat of a new disease: AIDS.

- In the 90s, the COI adapted to new opportunities, such as the web, by developing specialist divisions including New Media and Sponsorship.

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