Sun. Nov 17th, 2019

WPP’s GroupM agency MediaCom just lost a longstanding client — and it marks the latest casualty in the accelerating trend of brands taking media in-house

Source: http://feedproxy.google.com/~r/typepad/alleyinsider/silicon_alley_insider/~3/aED9Mtd4_4g/bayer-is-putting-its-global-media-business-up-for-review-2019-10

WPP’s GroupM agency MediaCom just lost a longstanding client — and it marks the latest casualty in the accelerating trend of brands taking media in-house

  • German chemical and pharmaceutical company Bayer is putting its global media business up for review, ending its longstanding relationship with GroupM agency MediaCom, part of ad holding company WPP, said a source with direct knowledge of the situation.
  • The Aleve and Alka-Seltzer maker informed MediaCom of its decision last week and is expected to begin searching for a new global media agency in the next couple of weeks.
  • MediaCom has worked with Bayer on the estimated $400 million media assignment in the US since 2011 and also handles the account globally.
  • The review follows Bayer bringing its US digital buying in-house beginning in 2017.
  • Click here for more BI Prime stories.

German chemical and pharmaceutical company Bayer is putting its global media business up for review, ending its longstanding relationship with GroupM agency MediaCom, which is part of ad holding company WPP, Business Insider has learned.

The Aleve and Alka-Seltzer maker informed MediaCom of its decision last week, and is expected to kick off the search for a new global media agency in the next couple of weeks, a source with direct knowledge of the situation told Business Insider. MediaCom has worked with Bayer on the estimated $400 million media assignment in the US since 2011 and it also handles the account globally.

MediaCom, GroupM, and Bayer have not responded to multiple requests for comment from Business Insider.

The review comes on the heels of Bayer beginning to bring its US digital buying in-house in 2017, Digiday reported. While Bayer’s team initially worked with MediaCom on media buying, the agency was gradually phased out and left to handle offline media only. Business Insider was unable to learn which agencies will be invited to pitch for the business.

In-housing shows no signs of slowing

The Bayer-MediaCom relationship has been under stress for a few years, and WPP even roped in a small team from MediaCom’s sister GroupM agency Essence to work alongside MediaCom at the client’s behest, but that move didn’t work out, said two sources familiar with the situation. 

Bayer is looking to bring all US digital media buying in-house by 2020. It’s been taking on functions including strategy, planning and analytics in 2019, working with S4 Capital’s MightyHive during the transition, according to Digiday. The company claims to have reduced its programmatic buying costs by $10 to $11 million within the first six weeks.

The desire for more control over their consumer data has led to an increasing number of brands including ADT and Hershey’s taking media operations in-house. 78% of brands that are members of the Association of National Advertisers reported in 2018 that they had some form of an in-house agency.

Read more: Hershey’s bet on in-housing is yielding sweet results, with overhead costs down 25%, output up fivefold and over $4 million saved in agency fee

Media offerings have also become increasingly commoditized 

The breakdown of Bayer and MediaCom’s relationship also demonstrates how the agency and the ad-agency-holding-company model continues to face challenges on all sides. It is another blow to WPP, which just lost a large chunk of its Johnson & Johnson business.

Read More: WPP just lost a huge chunk of one of its oldest, most valuable accounts, Johnson & Johnson

While clients take more of their ad duties in house, the rise of programmatic advertising has impacted media agencies as competitors can step in and automate the media-buying process. In such an environment, media agencies like MediaCom no longer have the clout they once did in TV buying.

Bayer spent $5.4 million on media in the US in 2018, according to Kantar. 

Join the conversation about this story »

NOW WATCH: Burger King’s CMO explains why the biggest risk in marketing is not taking one

Source: http://feedproxy.google.com/~r/typepad/alleyinsider/silicon_alley_insider/~3/aED9Mtd4_4g/bayer-is-putting-its-global-media-business-up-for-review-2019-10