Canada’s media operations, already laboring for the slimmest of margins, could be getting squeezed once again because of the recent flurry of account consolidations.

In addition to the pressures brought on by major global consolidations, media operations also face increasingly fierce competition due to consolidations here at home.

Because their fees for services are already bare-bones, media firms can only compete with each other on the basis of which one can buy more efficiently.

In Canada, media commissions generally range from 2% to 2.5% of gross television expenditures.

But the job is getting much more labor-intensive because of Canada’s fragmented television market and bigger buying groups mean there is a wider range of brands involved in each consolidation.

Rogers Communications is one example of the companies consolidating media buying of all their divisions and affiliates with one firm.

Rogers’ $35-million account went to Media Buying Services of Toronto last October.

In a different twist, last month, five of Canada’s consumer goods companies formed a buying consortium and put a consolidated account valued at more than $78 million in the hands of Optimedia, the media buying division of FCB Canada.

Globally, in recent months, the industry has seen some major consolidations that have trickled down to the Canadian affiliates of the agency networks involved.

These consolidations include that of S.C. Johnson & Son with True North Communications’ division, fcb; Colgate-Palmolive with Young & Rubicam; Bayer AG with Omnicom’s bbdo, and Reckitt & Colman PLC with McCann-Erickson.

These major advertisers made these moves because they could not ignore the benefits it would bring their companies.

With consolidation, they are assured of unified messages for their products across all markets while gaining efficiencies – read savings – in media and production commissions.

While most would agree the global strategy is effective in terms of positioning and creative alignments, with Nike as just one example of a success story, what about the media departments?

u.s. commissions are generally lower than those in Canada, especially for television, which is primarily network buys, and could start at 1% or 1.5%.

Depending where the global consolidation deal is struck, in Canada, where media buying is much more selective and, therefore, labor-intensive, buyers could find themselves working for much less than their already low fees.

Ann Boden, president of bbdo’s McKim Media Group, says:

‘If it was a North American consolidation and they were buying magazine plans such as Time or Reader’s Digest out of New York, there would be a little savings there.

‘But when it comes to broadcast, it’s all so individual,’ Boden says.

‘We have a market-driven television industry, and they [the u.s.] have a network-driven television industry,’ she says.

The Canadian television market is much more fragmented and with the strength of regional networks and independents, many more media dollars are being spent on a local basis.

Lorraine Hughes, media director of TBWA/Chiat/Day, says this not only means more work, but, in addition, higher weights in Canada are needed to get the same reach and frequency.

‘I’ve had this discussion with a lot of u.s. agencies and clients and it always amazes them,’ Hughes says.

‘We have to tumble a myriad of numbers to prove to them that to break through in this market, we need more weight than they do in the u.s.,’ she says.

Hughes also says that a more expensive and work-intensive level of reporting comes with global consolidation.

She says this is because when an agency has Canadian media buying business it has one client to report to.

She says with global business, the agency must also report to head office in New York or London, as well as regularly report results on an international basis.

A number of people in Canada’s media industry believe the fees have to go up. But given the competitive nature of the business, that seems unlikely.

An alternative that may hold some attraction to advertiser and agency is incentive-based fees.

Similar to incentives paid to an agency for creative expertise in building brand awareness and marketshare, a bonus would be paid for delivering beyond the base media plan.