Advertisers are missing a trick. They may have done bulk-buy deals to reduce the cost of advertising space but they could be ignoring even bigger savings, according to Media Audits, a company that monitors advertising costs.
In a report, Advertising as an Investment Not a Cost, it argues that the failure to observe some simple strategic guidelines means that many pan-European advertisers are paying more for their TV advertising campaigns than they need to.
The report claims that the wastage stems from the "startlingly inconsistent" use of media in different markets - and that too much of the decision-making on advertising is being left to individual markets, with little transfer of best practice.
By contrast, says Media Audits, shifting TV campaigns into cheaper months could save up to 10 per cent of campaign costs, while greater consistency of audience targeting could produce a 20 per cent gain in efficiency. Significant savings could also come from reducing unnecessary overspend in some countries.
"Cultural differences are about what advertising planners feel happy with, rather than any rational differences," says Michael Cluff, Media Audits director. "Take the average weight [the number of spots advertisers buy] in Italy. It's much higher than you would rationally expect."
And while 41 of the top 50 pan-European advertisers have consolidated their media buying into a single network in the quest for cheaper prices, the consultancy says they are failing to compare the value - in terms of the number of television impacts and their price - that they receive in each market.
Media Audits admits that some advertisers have taken these lessons on board. Kimberly-Clark, it says, has achieved 6.4 per cent of value above what its spend would normally buy by focusing its UK TV budgets in months such as January and December, rather than triggering campaigns in more expensive months such as October and November. By contrast, Kraft obtained 4.2 per cent less value by concentrating its campaigns in more expensive periods.
And while the consultancy acknowledges that some advertisers are limited in their ability to use cheaper months, it believes 60-70 per cent of them should not have any problems exploiting seasonal differences.
The study also compares car advertising among medium-sized vehicle brands in the UK and Germany and says that there are significant differences in the demographic groups being targeted, although the models are identical and are being promoted using the same creative vision.
However, the consultancy does praise some brands for applying consistent rules across Europe. Toyota and L'Oréal are singled out for adopting the same weekly weight in all markets, while Reckitt Benckiser wins plaudits for matching its advertising spend to that of its competitors.
Media agencies argue that such analysis is simplistic and is merely a starting-point for further research. Bob Offen, global chief strategy and marketing officer at Media Planning Group, says the problem with the study is that it does not know whether the differences it has highlighted are conscious or unconscious.
Simon Francis, OMD Europe's director of strategic planning, also argues that you cannot make all your decisions about when to advertise based purely on media cost. OMD's planning system, he says, takes into account 32 other factors when it comes to planning campaigns - and, he adds, OMD's clients signed off all its spending decisions.
Oliver Cleaver, European media director at Kimberly-Clark, admits that the arrival of the euro has allowed the fast-moving consumer goods (FMCG) group to compare costs more "dispassionately". But despite the fact that all European advertising is now centrally approved it is unlikely that media strategies among, for example, FMCG or car brands would be repeated from market to market.
But Mr Cluff believes that the failure to achieve strategic savings is ultimately a result of clients' tendency to look on advertising as a cost rather than an investment. Centralised teams can also face pockets of resistance to innovation in local markets. "If you want to tell your Italian operation that it is running advertising weights that are 2½ times higher than the ones you run in the rest of Europe, you've got to take on the Italian marketing team," he says.
Mr Offen agrees that getting pan-European clients and media networks to work in the same way can be difficult. The key to success, he says, is balancing the need for central control with the ability to exploit local opportunities: "The difficulty is balancing the local flexibility with the central strategy. If you want the benefit of local flexibility, it' s much harder to police."
Mr Cluff says only 15 per cent of advertisers have guidelines that they are enforcing on this issue, although another 15 per cent are beginning to think seriously about it. And he believes that the arrival of a pan-European marketing supremo with the power to put this process into action is not far away.
"I would say that five years ago there were barely any clients that had people who could influence that change. Now 35 per cent have someone who can influence that change and there's another 20-25 per cent who are clearly evolving towards that," he says.
II. Read the text carefully and then recollect the facts about advertising campaigns of the following brands. While summarising try to use your background knowledge.
III. According to the text, are the following statements true or false?
1. Usually companies spend more money on advertising than they really need.
2. Decision-making is a responsibility of world-leading companies.
3. Tastes of viewers differ from country to country.
4. Those who launch their advertising campaign in autumn, often gain more profit.
5. Seasonal and cultural preferences are really an important part of an advertising business plan.
6. Arriving of euro helped to balance all advertising difficulties.
7. Investment point dominates over clients' tendencies.
8. To be successful in advertising sphere, you are to combine central control with local preferences.
9. Nowadays consumers can influence the change, which is now taking place in the world of advertising.
IV. Complete the following summary. You should use both words and word-combinations from the text. Make sure you use the right form of the word.
Media Audits supposes that companies could save more money if they _________ the cost of advertising space. According to the reports, too much responsibility was put into __________ __________ , which are not very experienced.
Media Audits mentions that companies should reduce __________ in some districts. Cultural differences play a significant role. In Italy, foe example, sport advertisements take the ___________ __________ .
Seasonal differences also effect promotion of advertisements. Kimberly Clark, for instance, achieved more than 6%, launching its advertising campaign during cheaper months, but Kraft, on the contrary, gained less __________ , having spent money on advertising during October and November.
Toyota and L'Oreal were praise for using __________ rules.
With arrival of euro, costs begin to be compared more ____________ .
Mr Cluff thinks that success or failure of advertising depends on clients' _________ , but not on ____________ .
V.Read the following text and be ready to summarise the main idea.