Friday, November 25

How the State should manage its advertising budgets.


In his Final Word for 23 November, "Economia vs Medea" Erik Best refers to some truly preposterous recent pronouncements about how State advertising budgets should be managed. First Petr Necas suggested that each ministry should directly deploy its own budgets. He implied that the use of media agencies was somehow a waste of State money. You can almost excuse him this, since politicians around the world have often come to the same conclusion. Like most people who do not work in advertising they are not familiar with how the business works. But his pronouncement was then supported with even more absurd ideas, from people who really ought to know better. Michal Klima suggested that the Union of Publishers could be the body which deploys these budgets, and that the State should always pay the ratecard price for its advertising. These ideas are so ridiculously self-serving that I wonder how he can say such things in public and not expect to be deafened by the sound of the entire advertising industry howling in derision. State advertising, like that of any major advertiser, needs to choose the most efficient mix of media channels: TV, radio, billboards, all will be used, as well as print. Now if this decision is left to a body representing print media owners, which medium do you think might get most of the budget? Can you possibly work out the answer to this difficult question? As for being forced to buy at ratecard, how utterly ridiculous. No major advertiser buys at ratecard, thanks to media agencies, who get big discounts in return for big volume purchases. We as taxpayers expect the government to spend our money wisely. That of course obliges them to negotiate big discounts. Does Mr Klima believe that if the government decides to buy 5,000 PCs for State offices, they should pay the full retail price?

How should State budgets be managed? It is widely acknowledged that the UK has the best model. The Central Office of Information is a State body staffed by professionals who previously worked in top marketing departments or agencies. The ministries brief the COI on the objectives of the campaign they want to run, and these professionals then brief agencies to produce the work. Many top UK agencies have worked on COI campaigns. Proof that the system works is that the COI is the most frequent winner of Advertising Effectiveness Awards in the UK - these awards are like Effies, but with much higher standards - almost like scientific papers in their standards of proof. When it comes to the media buying, of course the COI selects a top media agency which secures the best prices, by putting together the combined budgets of all the ministries. But the best thing about the COI is that it is a barrier between the politicians and the money. The COI reports to the UK Parliament (not to just the current ruling political party) and all its activities are subject to public scrutiny. Unfortunately, the new right wing coalition government has decided to make sweeping changes to the way the COI works, which will almost certainly be detrimental, but will be held up by politicians as ‘cost-saving.

The State should deploy this money like Unilever or P&G does. It should be using professional marketing managers to deploy these budgets. Politicians or ministry employees should never be in direct charge of such budgets, because they simply don't have the necessary professional qualifications. On the other hand State controlled or supported bodies such as CEZ or CSA are a different case. They are competing in markets, and have their own marketing teams. They ought to be capable of managing their own budgets.

It was alleged that Necas' goal was to try and weaken the agency Medea, controlled by the politically active Jaromir Soukup, which currently buys media for a number of State institutions. The proper solution of course is to have a Czech COI which will hold a tender, managed by real media professionals, which will assess which media agency can deliver the best deal for the taxpayer.

Finally, one interesting thought. Under the Freedom of Information Law, we have a right to know how any State body spends our money. However we currently could not get much detail about media buying costs for State advertising campaigns, because Medea would quite reasonably argue that they would be releasing commercially sensitive data. However if a ministry starts to buy media directly, we have the right to inspect every last detail of how that money was spent. Any advertising professional who obtained such information would, I am sure, find it very interesting.


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