To Hub or Not to Hub: a Modern Media Question

The globalisation of advertisers, advent of global media players and technologies like Google and Meta, and the quest for efficiency has seen many advertisers and their agencies explore consolidating media buying into hubs. 

These buying hubs are centralised units covering the whole world, or a region eg. LATAM. Most often they are focussed on digital performance media, with linear media buying remaining localised. 

The local media manager at the advertiser writes briefs for the local media agency, that creates media plans for all media, the local media agency buys TV, out of home etc, but sends the buying briefs for PPC, Paid Social to a centralised hub. The centralised hub sets up the accounts, runs the campaigns, and provides reporting back to the local agency. 

In theory, the centralised buying hubs offer:

• Lower costs; the deduplication of local teams bring lower fees, technology and data costs
• Ease of management; running one global or a handful of regional buying hubs maybe easier than running lots of local end market units.
• Benefits of greater consistency; it should be easier to apply common standards to taxonomies, guidelines, reporting
• Better learning; a common approach to test and learn allows better faster learning and theoretically quicker improvements in ROAS
• Easier integration with creative; one hub integrating with creative/production platforms rather than lots of markets, may improve creative optimisation

So, the promise of “hubbing” sounds compelling, especially when it is pitched by one of the leading global agency networks. But, are there downsides, how do you ensure the benefits materialise, can the agencies operationalise the theory?

At Flock, we have worked with many leading advertisers to evaluate global, regional, local, and offshore buying solutions. As well as the role of “specialist” networks versus the traditional networks. We have hundreds of agency appraisals evaluating buying hubs. Some of the potential downsides we have observed of the buying hubs follow:

• Performance; simply put, do they deliver better ROI? what are the guarantees of performance that have been made? Do you have baseline KPIs and guarantees for enhanced performance?
• Local insight; one of the often cited downsides of centralised buying is that local insight can quickly be lost. Knowledge of local audiences, timings, competitors, media owners and audience behaviours can offset some of the benefits.
• Speed; does time difference and communications slow down optimisation and changes to campaigns?
• Integration; does the buying hub integrate well with the other elements of the plan? Are campaigns integrated, or are there challenges in integrating off-line and performance media
• Communication: is the communication between hub, local agency and advertiser optimal in terms of cadence, detail, language etc?
• Costs: does the hub offer real tangible benefits? Are all “shadow” costs evaluated?

Where advertisers and their agencies have rushed to execute consolidated digital buying hubs without addressing potential downsides with careful plans there have been some very poor results; consolidation of the downsides means everyone is unhappy!

Before implementing buying hubs advertisers would be wise to follow the checklist below. Or, if your buying hub is not working, you may also choose to follow many of the same steps ;

• Do a full evaluation of the business case looking at all benefits, risks, enablers and dependencies. Benchmarking agency remuneration may be useful to estimate the benefits using tools like the Flock Agency Scoping Tool.
• Get great baseline and benchmark KPIs against which to evaluate the potential benefits, and guarantee success. The Flock Media Healthcheck Tool may help you get a great diagnostic for areas to address.
• Map the processes, data and technology required. This includes changes to team responsibilities and accountabilities internally! Specify the reports that drive performance, but also measure service, communications, integration eg. Flock Agency Appraisal Tool
• Understand the agency P&L and structure fees and incentives so that local and centralised hubs are fairly remunerated and incentivised for performance media success
• Study other agency use cases and take references. Some agencies have set themselves up well for success, and others have a string of problem cases. Not all agency management structures, talent pools, tech & data, and P&Ls are well suited to centralized buying!
• Have a crystal clear transition and test plan, to iron out any problems before committing all your spend to the new solution.

In summary, digital performance media buying hubs can bring benefits when well specified, well evaluated and executed, but equally can cause and consolidate a lot of issues if executed poorly or “oversold” by an agency doing it for the first time, or with a poor record of success.

We’d love to hear your views, or share some cases of our recent projects. Use the form below to get in touch.