March 09, 2017

  The island of Puerto Rico as many of our readers know is a territory of the United States governed by United States Federal Law.  It also considered a major US Hispanic Market, but since it resides on an island many place it under the international division.  But it has turned into a petri dish for many of this century’s testing: birth control, mass sterilization, agent orange and more up to the ad industry’s test of transparency.

Before the TRANSPARENCY ISSUES exploded here in the United States regarding the negotiations, the deals and the non-transparent nature some buying services and agencies handled media purchases for mainland clients.  The island of Puerto Rico is a true example of bending the rules of engagement in favor of the agency/buying service and maybe a client or two.  Ad Agency executives on the island have made fortunes (real fortunes) that mainstream ad agency heads only dream of achieving.

We have written in the past about the Volume Discount practice in Puerto Rico, were an agency negotiates a percentage of a media buy above and beyond the average or traditional fee for placement of a certain amount of ad buys on behalf of their clients.  Basically the ad agency gets a check at the end of the year or a kickback.

We would be remiss if we did not say that ratings do come into the analysis, but are not the final deciding factor most of the times.

As I have stated before, a good friend of ours advised us jokingly one day “that all of the major media buyers and all of the major media outlets get together at one Bar BQ and iron out the volume discount deals for each clients per station for the year.  It is so out in the open, that they send letters of agreements to finalize the deals”.  Funny no.

There is a transparency about the Volume Discount, but not effectiveness or efficiency or true ROI.

Does the Volume Discount process better serve the advertiser or buying the best programming available or media mix?  It has always been questioned, but personal fortunes are based on this system.

All US based media companies on the island partake in the offering, excluding none.  When Univision first opened their TV station in the market they honorably refused to engage in the Volume Discount process.  For two years, they suffered severe shutouts on ad buys.  They eventually accepted the need to be part of the process to survive.

In most media companies in Puerto Rico, sales managers are more important that general managers and owners, since they know with whom and how to negotiate a “make or break year" Volume Discount program.  The media sales managers on the island for all key media entities are Old Timers.  The buyers are too.

Opportunities for your executives in the marketing, media and public relations industries on the island are almost non-existent.  The USA should target the island for executives eager to work and really interact with advertising, media and public relations disciplines.

Reading El Nuevo Dia, my old hometown newspaper.  They work the Volume Discount system very well and as a newspaper out sells some TV Stations.  In Wednesday March 8th, 2017 issue the Sales & Marketing Executives (SME) promoted a presentation titled “2017 Marketing & Communications Forum” for Thursday March 9th, 2017 including Graciela Eleta now CEO of GFR Media and previously with Univision Communications and Proctor & Gamble. 

Good to know she is doing well and is enjoying the Puerto Rican paradise.

But ……..

I laugh not at the attempt to present such a panel with a straight face by the SME, but at the true nature of the media business on the island and the potential chicanery of the event.

Will they address the detrimental effect of Volumn Discount of the islands advertising industry?

Volume Discount does not only increase revenue coffers of the agency in Puerto Rico, but also poisons the true nature of creating efficient and effective media mix option for a client to enjoy true ROI.

If you are not a major TV entity or Radio group or Newspaper media entity, it's almost impossible climb out of the dark hole of the media swamp on the island.

The Agency Association on the island has had to interfere in the past were agencies bid on a clients business, not by offering a competitive ad agency fee and ROI deliverables, but only asking to get the account based on the Volume Discount pot of gold.  Really?

The industry was caught with their pants around their ankles.  Both ad agencies were known multinationals.

The Asociacion de Agencias Publicitarias de Puerto Rico ( Agency Association on the island) only promotes the creative process and awards recognitions amongst is members.  Any other disciplines in the ad industry falls into a dark hole, since the true reality of the ad business in Puerto Rico is delivering for the agency’s profit & loss statement and not the clients’ best interest.

Effectiveness and efficiency are not at the forefront.

There might be an exception, but ……..

We hope one day the industry modifies it stance on Volume Discount.  The clients need to demand this.  Its time.

It creates a more competitive environment that allows all media, companies and executives to bring a much-needed renaissance to the industry.

Mis dos chavatos.

Gene Bryan - El Oso del Yunque

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