What you need to know 

• IPG Mediabrands Australia boss Mark Coad warned that handing over econometric data to media vendors could put agencies and advertisers on the back foot when negotiating prices at the Marketers and Money conference held by Mutinex in Sydney last Thursday,
• "We could be paying more for the real estate if the media owners know how effective it might be for a certain advertiser," he told Mutinex's APAC CEO Mat Baxter. For the same reason, he said he couldn't see business outcomes (via marketing mix modelling (MMM)) becoming the currency over audience. 
• UM's Anathea Ruys agreed with Coad's take, noting that outcomes were less directly comparable than audience figures. Also in agreeance on currency, Atomic 212's Rory Heffernan caveated that vendors were increasingly open to considering performance outcomes like sales or revenue in their negotiations.
• However, per Baxter, the tendency of those negotiations to be done by way of upfront deals between Holdcos and legacy media owners could limit the role of MMM. By "locking in" budgets in advance, he claimed upfront deals make it difficult to shift spend between channels if a vendor is underperforming. 
• Media buyers don't think it's so cut and dry - they argue there is an opportunity to come back to the negotiating table with the right data to make the price fall in line from an ROI perspective. "If something's not delivering, we've got mechanism after mechanism to re-engage and to move things around," per Ruys.

Econometrics might have given marketers clear oversight of how their media spend impacts business outcomes but IPG Mediabrands chief Mark Coad suggests advertisers and agencies should hold those cards close to their chest when it comes to negotiating with media vendors.

Speaking on a panel at the Marketers and Money event hosted by Mutinex in Sydney last week, Coad was probed by the marketing mix modelling platform's new APAC chief Mat Baxter as to whether there is merit in the evolving measurement currencies from an audience to a performance-based conversation.

Coad said he was in two minds. Drawing on the analogy of landlords and retail businesses – “when we're negotiating space with media vendors, we're renting space off them for a while” – he argued that sharing outcomes transparently with vendors could put agencies on the back foot.

“You’ve got to be careful what you share with those landlords because if the landlord knows that the business is highly successful, they’d put the rent up," he told Baxter. 

“My point being, we might know it, but it doesn't necessarily mean we have to share it all." However, if the business outcomes relating to a certain channel were detrimental, Coad reckons that information could help negotiate a better price. “But we need to be careful how we use that," he warned. "We could be paying more for the real estate if the media owners know how effective it might be for a certain advertiser.”

That dynamic is already at play in the case of some digital players like Google and Meta.

“There are partners out there that know a lot more than others about the effectiveness of their channels, and I don't think it's any mistake that some of those are less negotiable because of the knowledge they have,” said Coad.

Audience vs Outcome

The question of how measurement might be leveraged for better media negotiations was the crux of the panel, which saw Coad joined on stage by UM boss Anathea Ruys, and Atomic 212’s national managing director, Rory Heffernan, while Baxter played the role of the host.

“For as long as I can remember, back when I was a TV buyer, many, many years ago, you bought media off audience reach. And if you look at the history of why that's always been the case, it was really because you couldn't link, at that point, the purchase of a spot to an end outcome for a client,” posed Baxter.

“Now we live in a world where we can get all the way down to if I do this, it generates that in terms of the true commercial outcome… But we still seem to have this mindset when we go out and do a media negotiation that we analyze audience delivery, and that's the currency by which we make a deal and we set a price.”

Pushing back on Coad’s concerns for price inflation, Baxter questions whether the “long-term collective advantage” of “moving from an audience-based economy in marketing to a performance-based economy” outweighs the risk.

“Of course, there'll be certain media that can charge maybe more because they're very outcomes-centric and very effective, but they'll be offset by those that get away with charging a shit ton right now that actually don't perform very well at all,” Baxter argues.

But Coad held firm. In his view, the best currency available is audience. While econometrics might “fuel our decisions”, per Coad, using it as a currency would “drive the price through the roof” for highly effective media properties – “there’s a basic economics of the demand and supply”.

Ruys concurred. She said audiences are still important, given outcomes can’t always be “put into a neat box” – i.e. they’re not directly comparative.

“There are some outcomes that are slow burn, long burns, and you need audiences to build up awareness, create those muscle memories, create those brand imprints that in years to come will deliver the outcome… I think all our clients are very key for us to be very outcome-focused, but they know sometimes a great way to get there is by understanding how to reach the audience."

Deals or no deals

Beyond currency, Heffernan points to the fact that media owners are “very much open to having the conversation about the outcomes…and they want to under what’s driving it”.

It goes “deeper” than capital allocation at the publisher level, per Heffernan. “When the publisher is strategically aligned with the client, they want to know [what the outcomes are], and they want to understand how the buy or the sponsorship, or whatever it is, can improve those outcomes.”

To that end, Heffernan said it’s not uncommon for the buying metric (audience) to be linked to a performance outcome like sales, revenue, or CPA. 

Asked whether IPG Mediabrands has ever engaged in those kinds of deals with media owners, where the fee can be determined not just by an audience delivery but an end outcome in sales, Coad said they’re not prevalent “but they do exist”.

“When I've seen it, you end up in remnant inventory, shoulder areas where it's unsold, ‘chuck that at them, and if we sell a few we can say we’ll make some money’… I wouldn’t [encourage] it.”

But while he’s firm on the fact that audience is the currency, Coad is “all for” econometrics.

“There's not an advertiser in this room - nor in this industry - nor an agency that services [those advertisers] that is in the business of buying media impressions. None of us are. We're in the business of buying business outcomes.”

Upfront vs fluid spend

Much more common, at least amongst the holdcos, are upfront deals with legacy media owners that lock in budgets in advance. Baxter argued it’s a less “dynamic” approach than the digital channels where optimisation is the norm.

“The dollars don't flow as freely between media owner A in television and media owner B in television, because I've done my TV buy. It's locked and loaded, and in many cases, I've got a deal that says I'm going to spend this much money for the year with this network, and this much money in the year for that network," he said.

“I'd argue that sort of upfront deal mentality, to some extent blunts our ability to be hyper-fluid with moving dollars between established media owners in the same way we might with say programmatic,” quipped Baxter. In doing so, he says advertisers aren't afforded the opportunity to use MMM to its full potential.

“I do my deal in January, I commit 10 million bucks to Channel Nine - I don't even really know what my current problem is at that point, [but] I'm still going to give Channel Nine the commitment. And then, I guess if Channel Seven is doing better, moving the dollars out is going to be a bit of a difficulty, because I'm going to miss my contract commitment." 

Heffernan explained that as well as shifting the structure of the client’s budget in the first place, it’s about coming to the negotiating table with the right data to make the package “fall in line from an ROI perspective”.

“If the CPM is at that breakeven point or there's no headroom to spend more in that channel, [we negotiate whether we can] lower the CPM or move some of the inventory around to get to that point.”

Speaking from the holdco perspective, Ruys defended the value of partnerships with media investors that agencies are already investing with heavily. She said such deals “unlock so much more than simply price”.

“There are environments that deliver significant, emotional, attentive engagement [and] deliver great outcomes to clients,” per Ruys. “You only get access to those if you are able to make commitments.”

“That does not mean our clients are locked in,” she continued. “If something's not delivering, we've got mechanism after mechanism to re-engage and to move things around.”

“We don't need to be binary. We don't need to say we are all in, [that] we are locked in with Channel Nine, and we're just going to sit there and wring our hands if it's not delivering. There are ways of being flexible.”

And on that note, she nods to MMM as a big part of the measurement solution - "but we don't need to go all the way, we can take advantage of both sides".