While companies are always looking for ways to most efficiently spend their advertising dollars, there are many considerations when making decisions about how to approach media negotiations.  It is a common practice for companies with multiple brands to place “corporate” buys.  It would seem combining the brand budgets to leverage efficiencies would be advantageous (and in many cases it is), however there are also some limitations or risks to this approach which should be considered, as well.  Below is a list of pros and cons to be discussed when deciding whether to enter the market place with a corporate buy:

Potential Benefits:

  • Pricing.  There are pricing efficiencies that are afforded when entering the marketplace with the leverage of a significantly larger budget.  Combining individual brand funds allows your company to better compete in the marketplace with other advertisers with sizable budgets.
  • Optimal Placements.  Opportunity for optimal programming choices and position in commercial break based on volume.  With a larger budget and volume of inventory to be secured, more flexibility exists to secure ideal schedules and programming for your portfolio of brands.
  • Audience Guarantees.  Fewer guarantee demos to be stewarded, allowing for flexibility to recoup impressions on a timely basis.  Ability to constantly monitor the portfolio delivery on a corporate level means being able to quickly react to networks not delivering the corporate guarantee.  In addition, combining brands provides the flexibility to secure ADUs more readily throughout the year, as there is higher likelihood that one or more brands will be in flight in a given week.
  • Streamlined Ordering/Posting.  Documentation can be streamlined to minimize manual work and potentially can limit confusion of expectations based on multiple or inter-related versions of the same document.  For example, order letters can be executed on a corporate level, encompassing all brands, therefore allowing one document to house all necessary information for networks.  Planning/buying/posting information is also more easily summarized for upper level management to be able to review without having to sift through detailed brand level information.
  • Financial Flexibility.  More ability exists to build options into the buy terms to allow for movement/cutting of dollars if needed when approaching the marketplace with a bigger budget.

Potential Risks:

  • Brand Target Delivery.  Potentially, less control of brand budgets could exist based on all brands being rolled into the overall guarantee.  If budget cuts are necessary, across any/all brands, things become complicated.  Brands with unique target/guarantee demos (based on brand/marketing goals, etc.) could lose the ability to take a more targeted approach with media properties by being rolled into corporate deals with more “generic” parameters.
  • Informal Brand Allocation Processes.  Monitoring brand allocations to assure all plan goals are met and each brand receives their fair share based on budget can be a challenge.  Planning and buying groups must be in constant communication in order to steward the buys corporately, while also monitoring brand delivery driving additional man power at the agency.
  • Seasonality.  Brands with seasonal/timely messages may have challenges recouping ADU weight based on other brands being flighted when ADU weight becomes available.
  • Diluted Tactics.  Networks may have fewer specs/details to ensure all goals are met corporately and within brands (added value, etc.), so additional communication must be generated to fully document expectations of delivery.
  • Brand Performance Reporting.  Buy and post information is often more corporate in focus, and is in many cases less immediately relevant to individual brand managers, without an extra layer of reporting.

In the end, each advertiser along with their agency must make the decision whether the benefits outweigh the potential risks associated with approaching their media buys from a corporate perspective.  Walking through the above points to consider how your portfolio of brands fits into the corporate buy framework is the key to success.

For questions regarding this article, please contact Mike Solomon.