An interesting trend is happening in traditional media and it has interesting consequences for marketers. Meredith Publishing is now managing all the business operations, including ad sales, for Martha Stewart’s print properties. Hearst recently launched a division that provides scalable solutions for smaller and medium sized publishers, including ad sales consultation. Today a number of spot radio rep firms announced they were partnering to form an umbrella radio and digital media sales rep firm.
While these decisions make sense for these media companies' needs it will have impact on marketers in ways that might not be good, most notably upward pressure on ad inventory pricing.
Marketers get the best price when they pit multiple sales organizations against one another for share of a media budget. Now that Meredith represents an even larger share of the viable print inventory what is their incentive for negotiating price down? The power they have to creep pricing up will have dramatic impact on the market. And not just for the companies participating in the sales co-ops or outsourcing. Their competitors now know that fewer players are negotiating so it would not surprise me if CPM’s begin to inch up. I recall having this conversation over breakfast with Tom Harty, The President of Meredith’s Magazine Group, a few years ago when Hearst acquired Woman’s Day from Hachette. I thought, in the long term, that it was good for both Meredith and Hearst to not have a wildcard single book that could only be a spoiler on price.
On the radio side, this impact will be felt most by agencies that buy through the rep firms. As far as I can tell it is mostly large media agencies who buy their inventory this way because the buyers simply do not have time to negotiate with every station in every market. Again, where in the past two or three rep firms were negotiating against one another for radio buys now they will not because there is no incentive at the company level to do so. This is one of the reasons why the FCC has ownership limits on radio and television stations in any given market.
Does your radio buyer buy through rep firms? If so, what does that mean for you?