Traditional Intermediaries
The advertising media buying industry is composed of three major intermediaries:
Depending on the size of the company, when media instruments are needed, several options can occur. First of all, when the company does not have any budget constraints, or budget limitations, the company can go to a broker that will provide valuable information regarding the nature of the media to use, the dollar amount to spend, the length of the campaign to adopt and so on. On the other hand, when dealing with relatively small organizations, those companies will more likely go directly to the advertising agencies, and therefore, reduce intermediary costs.
However, even if brokers can be viewed as an additional cost, they represent a certain expertise and play a role of consultant that the media companies do not necessarily focus on. Brokers know what kind of media to use function of their clients' strategy, goals in terms of targeted population, allocated budget and needs.
In addition, as brokers deal with a large volume of media purchases, it is much easier for them to obtain discounts, therefore reduce costs for their clients. However, in order to maximize their profit, brokers must be able to sell all of their on-hand media products, because once the time period is gone, instruments (TV spots, Magazine or paper publication, …) are dated and useless.
In terms of offering, companies can obtain packages, punctual actions, or customized campaigns from Ad agencies. More precisely, ad agencies offer three types of services:
Ad agencies, as brokers, represent a very valuable tool for companies. They provide the clients with expertise and knowledge, but also constitute the easiest way to be able to produce a TV, or radio, commercial spot. It is very painless for companies to use ad agencies in the sense that ad agencies deal with everything given the nature of their clients’ strategy and campaign.
So what has happened to make this dull industry sparkle? Two things. First, buying space is no longer simple. Newspapers are merely one among a plethora of advertising media. These now include television in all its terrestrial, orbital, analogue and digital forms; magazines for every taste; billboards and bus shelters; screen-savers and sky-writing. All are ways to reach the minds and purses of customers. Even athletes’ eyeballs, wrapped in screen-printed contact lenses, have been used to tout running shoes. Deciding which media to use and when is a part of any advertising strategy. Once a decision has been taken, the deals to secure that space are no longer as straightforward as telephoning a newspaper at the last minute.
Which raises the second reason for the existence of modern media companies: economies of scale. The more time or space you are buying, the better the prices you can get from media owners. Size also helps a firm plan its campaign, by covering the expense of developing software and systems to track audiences and their response to what they see and hear. Unlike creative work, media planning and media buying have become the provenance of large specialist firms.
If media buying is "unbundled", some agencies think that other bits of the business, such as consultancy and brand management, stand to be spun off too.
The greatest fear is that clients will start thinking of media buying as an entirely different activity from advertising. That would threaten the industry’s fee structure, which pegs an agency’s bill to the amount of space it has bought, rather than the effort that has gone into creating a campaign. If that happened, media buyers would be able to enjoy the ultimate revenge for all those years of subservience to their creative masters.