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mind of Magna Global
New IPG powerhouse for national TV negotiations
By Kevin Downey
Interpublic Group of Companies’ new Magna Global was formed to handle all national television negotiations for IPG’s Universal McCann and Initiative Media divisions. It’s a concept that IPG’s Germany-based Intensive has been using for the past two years and it gets off the ground officially in the U.S. on Sept. 1. Magna will eventually handle negotiations for all media and cross-platform deals for IPG. The new company will be the largest media negotiations company in the world, with billings in excess of $40 billion, and it will represent about one out of every four dollars spent on national TV advertising in the U.S. It is being called an agency-neutral organization that will negotiate deals on an aggregate basis for IPG but will leave all media planning and media buying to individual agencies. Bill Cella, who is currently executive vice president and director of national broadcast and programming for Universal McCann, will become Magna Global USA’s chairman. He spoke to Media Life last week about the formation of Magna and its role within IPG.
Why was Magna Global formed and what were the steps in bringing it together?
Intensive is an operation that combines the buying clout of Universal McCann and Initiative Media in Germany. It’s been in existence for two years and it buys all media and it’s been successful.
We’ve discussed incorporating that in the States from the beginning of this year with UM and IM. With the coming on board of True North, it took on a different direction and became Magna. We became even bigger with True North, not only in the States but also globally.
What began as a discussion about what’s been a footprint of future consolidation of media buying, which happened in Germany, turned into what Magna will start to be in the United States and in a global roll-out.
The idea behind Magna was to form what is called an agency-neutral company, which negotiates ad time for national television. How do you separate the negotiating and buying processes? What are the benefits of negotiating separately?
Here’s how it works. We are going to be the national broadcasting negotiating unit for IPG. Magna’s clients will be the agencies we represent, meaning Universal McCann, Initiative, True North, and all the other agencies we have in the system.
We’ll aggregate all the dollars that go into next year’s upfront, and Magna will negotiate with the networks for each time period with all the moneys we have.
In a typical upfront, the agencies’ buying groups would submit budgets to the networks by client and give them flight dates, schedules, GRP levels and that type of thing. In Magna, I won’t see those details. All I will work with is the aggregated dollars. The buying and planning strategies will remain within the agencies. Each agency will still have proprietary information that they will talk to suppliers about.
Magna’s purpose is to create the best value on behalf of all of those agencies’ clients. I won’t have the specifics of any agency’s clients’ proprietary information. What I have is an aggregated amount of money to attract the best value we can. That negotiated position then goes back to the agencies, and they execute to their individual needs.
It’s all about value. There are different aspects of value. One is efficiencies, one is promotional value, and one is marketing value. All those things are what we know Magna can create for the agencies’ clients.
How will Interpublic media planning and buying agencies be impacted? Will they simply execute plans based on a pool of existing deals negotiated by Magna? Will they have something like a menu of deals to choose from for their clients' individual needs?
Regarding the negotiating aspect of buying, think of it this way. Think of the network upfront in which a tremendous amount of money is involved. Think of an agency’s buying group that brings all of this information together on each individual client’s strategies. They submit budgets to the networks and they talk added value and that sort of thing.
In most instances, when it comes down to negotiating the agency’s deal, there are probably two people who usually do that. It’s not the buying groups, it’s two people on behalf of the buying groups. The two people then say to the buying group, ‘Here’s what’s been done, go talk to the networks and work out the details.’
That’s what Magna is going to be. It will be a small group of people. My No. 2 person and I will work with an advisory council, which will be the heads of the buying groups from each of the agencies. It’ll be a team of us conferring on aspects of the upfront, getting information on where we think the market is, and how we strategize when we go to the networks.
When it’s done, the heads of the individual agencies will take that information back to their groups. So, there’s still a huge application for buying groups, including the scatter market.
The planning groups remain intact. The strategy will be with the individual clients and agencies. That won’t change. I won’t know the specifics of individual clients, so I can’t be biased in any way, shape, or form.
They will put their plans together as they typically do, they’ll submit them to the buying groups, and the buying groups will then divvy up the dollars to different networks. All of that money is rolled up and given to me, then we try to negotiate the best deals for those clients.
How significant is the $40 billion figure and can you put it into perspective?
The significance of it is that, when you look at our competitors, and I think the next biggest competitor has $18 billion, it shows you that our system is second to none. It shows you by comparison that the next guy has a ways to go before he matches our clout.
It’s a large number to demonstrate the ability we have on a global scale.
One of the key things is, in the U.S. for example, we’re going to be 25 percent of the market. That will allow us to get almost a macro picture of the national broadcast landscape. The more knowledge, the more information we have, the better it should be for us to analyze a market and figure out what can and cannot be done.
When you look at it on a global basis with that amount of money, it will be even more pronounced.
The information gathering that Magna is going to get involved in on behalf of all these clients is a huge part of this thing. It’s going to help us learn the market better.
One stated goal of Magna is to raise media negotiating to a new level of sophistication. What might that encompass down the road? Does it mean moving beyond simply buying spots?
When you talk about the type of opportunities you can have with this amount of money, you should be able to talk about bringing promotional platforms and marketing opportunities to these agencies that they might not have been able to accomplish before.
This is still a negotiation and transaction business. When you have the spending power that Magna has, hopefully, it will create opportunities on the supplier side that might not normally surface.
One of Magna’s plans is to incorporate programming, research, and marketplace modeling. Specifically related to programming, does that mean more Family Friendly Programming Forum shows like Gilmore Girls and sponsorships?
There’s always that opportunity, and product placement is important too, if done in the right way. That’s meant to expose the brand better in an opportunistic environment. If there is a natural association with a brand in an environment where product placement can help, that’s great.
The networks are being more open to product placement than they have in the past.
The Family Forum is something that I’m heavily involved with. Those advertisers have their own agencies; that’s kind of a separate initiative. As far as programming is concerned, I can envision Universal McCann Entertainment Group morphing into Magna because it is a natural placement for it to deal with all of the Magna agencies.
UMEG has done a successful job of working with the networks and suppliers to create programming, get it on the air, and get it distributed. UMEG is only 10 months old and, in my eyes, is very successful so far.
Sponsorships are a great opportunity for Magna to get involved with on behalf of our clients, and we can make that happen.
Ultimately, Magna will negotiate for all media. How do you see that evolving? What's the next logical medium to get involved with?
There’s probably a natural application for print after we find how the national broadcast goes. That’s down the road, of course.
We’re going to address the national broadcast marketplace first and get our strategies and processes down. Once we get the processes down, then we’ll look to other media.
Internet is a huge application. I say print because that’s the next logical medium but there’s no doubt that even something like outdoor makes sense.
When you think about a client’s campaign and all the different things they buy to create a platform for a marketing campaign, why not negotiate a lot of the elements of the campaign to get the best efficiencies and added value.
Presumably, there is a cost savings to pooling all negotiating resources into one company. And there has been mention of centralizing backroom operations. How will this work and how will it save money? Will there be staff cuts?
There may be some elements of redundancies that we have to address. We don’t see it now but we’ll take a look at that and see how we could better manage the different aspects of the agencies.
July 23, 2001 © 2001 Media Life
- Kevin Downey is a staff writer for Media Life.
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