Media houses use new services and products to beat slow economy

Despite an economic slowdown resulting in deep advertising budget cuts, many media houses are expecting to grow this year thanks to the introduction of new services and greater independence from their parent companies. "I think that besides some negative effects, the impact of the crisis on the advertising market has been positive for a great number of companies," said Tomasz Englert, the managing director of Warsaw-based Mediacom. "It's a kind of a test of ability to compete and service quality." Mediacom earned zł. 409 million ($99.8 million) in revenue last year. Englert expects a 3% increase this year. Michał Szeptycki, the customer service director at SPC House of Media, a small Warsaw-based media house launched in 1999, said that despite the difficult situation on the ad market, his company has been developing since offering new services.

"We're not limited to media planning, we want to be active in sports sponsoring and in planning ad campaigns for Polish companies entering foreign markets," Szeptycki said. "Like everyone on the market, we're impatiently waiting for the economy to start growing, but this year should be another record year for us in terms of revenue. Our revenue should double." In 2001, SPC House of Media billed out zł. 13.2 million ($3.21 million). Małgorzata Grzyb, the customer service director at Initiative Media Warszawa (IM), also expects sales to increase this year. "Obviously, some categories of our business are very dynamic, ... but overall we should make more than last year due to a new client," she said, referring to mobile phone company PTK Centertel. Last year, IM's sales hit zł. 330 million ($80.48 million). "We're also trying to constantly develop the scope of our services," Grzyb said. In 2001, IM established Warsaw-based FastBridge, a company specializing in Internet and interactive campaigns, and Brand Connection, which was set up to handle local small- and medium-sized enterprises.

Full service According to Al Harris, the general director of Media Group, media houses are becoming increasingly independent and introducing new services, which help them to survive under difficult market conditions. "Media houses are looking for new ways to make money when they see their profits squeezed," he said. "Secondly, media houses are more independent." Media houses in Poland have evolved significantly since the early 1990s, when they were part of ad agencies' media departments. Many broke off and became independent entities. "It's a worldwide trend that media houses are becoming more independent from their parent companies," Harris said. "They no longer report to local creative agencies but to headquarters in New York or London so they can start to compete in areas like account planning, BTL (below-the-line advertising techniques), even production and some creative (campaigns). We are seeing the start of this process in Poland." And that's why companies like Mediacom can win tenders for total communication planning - public relations, marketing, advertising and media planning. "The scope of services paid by media houses has been redefined," said Mediacom's Englert. "We're beginning to work more closely with our clients on their marketing strategies. Our clients are really satisfied with our services if we can solve their marketing problems." In 2000, Mediacom won a tender for total communication planning for Procter&Gamble. "Why us, a media house and not a full-service agency?" Englert said. "Because from the very beginning, our work has been evaluated by the impact of the money we spent on our customer sales. We've always conducted detailed surveys of target groups, which now seems to be crucial in full-service tenders. But, of course, this doesn't mean we'll become a full-service agency. We simply present our concept, and many other companies would have to be hired to implement it."

Cost-effective and creative Small- and medium-sized companies are paying attention to the quality of their services after battling a down market and searching for new sectors to expand. "Today it's not sufficient to simply buy ad time on a TV channel," said Zdzisław Wiese, the customer service director of Poznań-based Media Concept. "What counts now is the ability to manage smaller budgets and to find new ways of using media to reach target groups. It's time for professionals." SPC House of Media added a new brand of services to its mix. "We planned a media campaign in the Russian media for (Polish undergarments producer) Atlantic, which is trying to enter the Russian market," Szeptycki said. "It looks like we can have another two to three customers who need planning of their campaigns abroad. Diversity makes your business more stable so that if you lose one client, it doesn't mean serious cuts at your company." Some remain skeptical of small local firms working abroad. "Planning campaigns abroad could be an interesting direction in developing a business, but the market is so mature that one cannot imagine a well-prepared campaign without the help of some local teams," said Media Concept's Wiese. IM, part of the New York-based Interpublic Group of Companies, established an international coordination group within the company to handle clients who need campaigns abroad. "We have subsidiaries in the Baltic states and Russia and there are many clients who want to coordinate foreign campaigns from Poland," IM's Grzyb said.