Consolidated Buying

　　Brain Magazine carried out an in-depth survey of Taiwans 18 leading media agencies during 2005 as a snapshot of this growing segment of the media indus-try. The findings showed that they racked up a total of NT$41.26 billion in billings during 2005, some 43.81% of the total billings of NT$94.19 billion achieved by the advertising industry as a whole.

Integrated Media Purchasing and Individualized Services

　　A quick look at the survey shows that nine of the top ten agencies in this seg-ment were from six major international advertising groups. They are Aegis, WPP, Dentsu, Publicis, IPG, and Omnicom. Only one local agency made it into the top ten. The name of the agency is Media Drive.

　　Looking at total billings for each agency, Aegis Carat Media again ranked first as an independent agency with billion of NT$6.0 in billings for the year. The agency added Yue Loong Motors and Chrysler to a stable of clients which already included giants like Uni-President Group and 7-ELEVEn con-venience stores, increasing its income by 9.29%.

　　WPPs strategic move in setting up GroupM to concentrate on media buying activities paid off as its MindShare Group (MindShare Media and MAXUS Media) and Mediaedge:cia occupied se-cond and third spots re-spectively in the rankings. MindShare and MAXUS share of election advertising and the addition of new clients like Taishin Bank and some parts of P&G helped to boost MindShare Groups billings by 15% to NT$5.75 billion during 2005.

　　Mediaedge:cias earnings were also helped by the year-end elections and a whopping total of 21 new clients including ET Mall. Billings leaped by 18% to NT$4.57 billion for the year.

　　Media-Palette was the sole Japanese company in the top ten, checking in at the fourth spot . Media-Palettes NT$4.1 billion in billings represented an increase of 7.89% over 2004s performance.

　　Close behind was Publicis Groups ZenithOptimedia, which snared fifth place despite failing to land a single new large client. With support from a sizeable number of medium and small clients as well as the payoff from new clients and advertisers from 2004, the agency saw its billings grow by 11 percent to NT$3.97 billion for the year.

　　KF Lee, Managing Di-rector of Carat, ex-plains that in recent years many clients have gradually come to realize that media agencies play a highly spe-cialized role in advertising. More and more these clients are taking advantage of the agencies professional skills such as research, using them as tools to assist them in their marketing efforts. They are also calling on the media agencies for help in planning their advertising budgets. The number of advertisers directly handing over advertising materials to the media is also dwindling. In addition, very few of the conventional 4A advertising agencies in Taiwan handle media services any more. Thus even though the overall volume of advertising has not shown a significant increase, the billings for media services agencies continue to grow year after year.

　　Suganami Tsuyoshi, Pre-sident of Media-Palette, explains that the media are diversifying more and more and that advertisers want to get the same〝bang for their buck〞even as levels of ad-vertising spending continue to soar. Many of the newer media are relatively invisible types of below-the-line media which account for a sizeable portion of the agencies growth in billings.

Carat Media Thriving on a Steady Base

　　2004 was a year in which international media service groups made widespread buy-outs of local companies in Taiwan, and many new types of smaller media services were set up. Looking back at 2005, the media service industry seems relatively quiet. KF Lee attributes this to root-sinking and base-building in the industry. At present the hottest trend among agencies is 〝conso-lidated buying and indivi-dualized services〞.

　　Consolidated buying takes advantage of the groups considerable buying power, with each of the groups smaller units shouldering a share of the expense. This all started when WPP moved the three affiliates under its umbrella - MindShare, MAXUS and Mediaedge:cia-into the same office building in April 2005. Group M, which took over consolidated buying for the three companies, began to make its influence felt in the market, as the three together represented more than NT$10 billion in media buys, more than ten percent of the total market in Taiwan. In effect, Group M became the largest player in media services, and its voice was deafening during a sensitive period for media prices.

　　ZenithOptimedia and Starcom of the Publicis Group followed Group Ms lead soon afterward, pooling their media efforts through a newly-formed company. At present the consolidated buying office has an temporary English name, mediaenchange, but no Chinese name, and is still in the process of setting up operations. It is expected to start up officially by March or April 2006. Meanwhile the two companies are busily engaged in negotiations with media to work out new conditions for media buying in light of the changes their greater buying clout will bring in their relations with the media.

　　Similarly, the same thing may happen with OMD and Mint, two affiliates of Omnicom, although probably not so quickly as in other groups. KF Lee points out that consolidation is basically a global trend among advertising agencies, providing more than just leveraged buying power for large groups. It also offers many management efficiencies which make consolidation a very attractive move.

　　At the same time, more and more advertisers are gaining an appreciation for specialized skills among media service companies. This means that media service companies have attracted a large number of clients, to the point that there are conflicts among brands, and some companies have responded by farming out some of their smaller clients to newly-established affiliate agencies. These companies function completely independently , keeping all personnel and information separate from each other. This confidentiality is often reinforced by housing the companies in different buildings altogether, thus maximizing the sense of competition between clients of the various agencies. One example of this trend is Vizeum, which was originally a department in Carat Media but was lifted out as an independent unit in June 2005.

　　WPP Group acquired Grey Advertising in mid-2005, and as a result Mediacom became a part of the WPP Group. WPP initially held a 25% share in Mediacom Taiwan, and attempts to buy out the remaining 75% share. MAXUS name has been changed to Mediacompany as a first step toward merging with Mediacom and securing its control of Mediacoms global network.