Mastering the media deal

A NUMBER of advertising firms and at least one non-advertising company are lining up to try and knock incumbent Western Australian Government master media contract holder Marketforce off its perch.

Marketforce has held the contract for campaign advertising, through its buying house Media Decisions, since the master media agency concept – where one company negotiates the media buying rates and handles the paperwork on behalf of the creative agencies – was first introduced in 1988. It holds the non-campaign contract through Marketforce Productions.

Marketforce group managing director John Driscoll said the agency would tender for both the campaign and the non-campaign contracts, worth almost $45 million when combined.

Media buyer Starcom has so far emerged as the only local challenger for the campaign master media contract. Last year the campaign media turnover was $30.3 million.

The competition looks to be more fierce for the non-campaign contract with MJB&B, Adcorp, TMP Worldwide Advertising and Communications, the Community Newspaper Group and technology company Empired (formerly Big Red Sky) indicating an interest.

Empired has already won a $600,000 Victorian Government contract to put its job ads online in partnership with TMP.

The turnover through the non-campaign contract in 2001-02 was $13.2 million.

Both the Brand Agency and 303 have said they will not tender for either contract.

The value of both the campaign and the non-campaign contracts has fallen over the past three years. In 2000 the turnover of the combined contracts was about $80 million.

The agency that wins either contract is likely to draw a 2.5 per cent commission on each transaction. While this is a low margin, having a $30 million or even a $13 million spend attached to an agency’s media spend brings it some buying power.

A WA Government spokesman said Marketforce would not be a shoo-in to retain the contracts.

“All government tender responses are evaluated on their merit and in accordance with State Supply Commission rules and tendering processes and demonstrate best overall value for money to government,” he said.

However, there are some within the advertising industry that believe the State Government should do away with a master contract and instead go to a master agency contract.

Under a master contract the Government would negotiate a media buying price with media outlets and each creative agency would buy off that rate.

V3 Leisure Management and Marketing director Stephen Wells, who was one of the architects of the master media contract regime, said he believed it was time for a new approach.

“When the master media contract was set up in 1988, it was right for the time,” he said.

“I think it is time to review the whole system and I don’t think that’s being done. Possibly a master contract would be the way to go.”

The Government spokesman said the master contract was preferred because it was believed to provide better benefits.

“All other States except the Northern Territory use a master media agency system to negotiate media rates and arrange their media booking needs,” he said.

Starcom managing director Alan Matthews said this was the third time he had tendered for the campaign contract and would probably be the last, due to the cost of putting together the tender.

Initiative Media, the only other media buying house in WA thought capable of taking on the campaign contract, will not be tendering.

Its managing director, Debra Neve, said that, in order to win the contract, the firm would have to “lose sight of the business we currently look after”.

MJB&B managing director Craig Billings said his agency was pitching for the non-campaign advertising because he believed the Government had made the process fairer.

“They’ve [the Government] taken things out that would have given Marketforce an unfair advantage,” he said.

Community Newspaper Group CEO Ian Thompson said the group was yet to decide whether it would tender.

p See Advertising Awards, page 19.