When Added Value Is No Value at All to Regional Companies

Understanding how added value can decrease your reach and frequency.

Added value is something that most media agencies will negotiate for their clients. Companies have come to expect some level of bonus with their buys which ultimately, depending on the amount, can make a media buy more productive and a better value.

While added value is typically part of the negotiation process, it is rarely contractually obligated and therefore may not be a part of the reconciliation of a media campaign. When media outlets are bidding for the business they do this so that advertisers feel like they are getting a solid deal and it makes the agency look better as well. Unfortunately, media outlets will rarely guarantee added value and only a handful of agencies will secure guaranteed added value. If the outlet has the unused inventory available, you may receive a portion of it and if they don’t then you won’t! The bottom line for the outlets is that added value doesn’t change the bottom line of their invoice. So, long as all the paid portion runs, they bill 100% of the invoice. When it doesn’t happen the client usually is none the wiser.

The problem with this is three-fold. The outlets calculate it into their original proposal to drive their cost per impression down and increase their reach and frequency numbers. This helps them secure a portion of the buy and may also be factored into the strategy of smaller mid-market buys to help increase the impact of the campaign. The problem with this is obvious. If the added value offered is not delivered, then the cost per impression goes up and the reach and frequency of the campaign goes down and no one except the client is the loser.

How can the media outlets get away with this? It’s very easy to explain, it’s the industry standard. Does it matter? Well let’s assume your agency secures 15 – 20% of the buy in added value. The loss of that much exposure surely will alter not only the cost and value of the deal but derail what was a strategic media plan, especially for companies that are mid-market in size and don’t have national size budgets.

For a regional company with a limited budget, getting any added value is more than just a bonus. It’s imperative that their advertising dollars are invested in the most efficient ways to achieve their objectives because they simply don’t have big wasteful national budgets.

Mid-size companies should insist on added value and then hold their agency and outlets accountable to deliver upon it or accept the fact that it may disappear and not even bother to include it in their overall strategy. Both the agency and outlets may oppose the idea but including this clause in your contract and holding everyone accountable to deliver will clearly deliver a better campaign than if it’s missing.

 

 

Author: Frank Gussoni

President & Founder of A3 media. We're Type A. We transform media from an expense into a smart investment.

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