What if the Oracle of Omaha Bought Media?
It’s a worthy consideration.
Imagine if Warren Buffett was in charge of your (or your client’s) media buying. Those same rock-solid fundamentals he’s used to build a massive financial empire would hold the same water in the media markets too.
Today, more and more advertisers haphazardly buy more and more types of media; the number of media-per-client has doubled in 5 years. I often refer to a couple of great Buffett quotes when explaining the perils of this aimless diversification. Of course, Buffett was talking about investing, but his comments translate readily to the world of media:
“Diversification is protection against ignorance. It makes little sense if you know what you are doing.”
“Wide diversification is only required when investors do not understand what they are doing.”Words of wisdom, indeed.
Let’s face it: many advertisers and agencies implement diversification for diversification’s sake only, as protection against ignorance or complexity. This “decision” is very damaging, and yields a less predictive — and far less productive — result for the client.
An article by Neal Bell examines the notion of Warren Buffett as a media buyer. The article points to disciplines Buffett would implement in lieu of today’s all-too-common dartboard strategies of media buying. We would include in that mix Buffett’s stance against blindly imposing reckless diversification on a buy.
While many could interpret Buffett’s comments as criticism, we see them as an opportunity. There are countless companies out there who truly believe they are getting a great deal, or doing the right (best possible) thing with their media budgets. Of course, time and again, we’ve known the converse to be true.
Next time you sit down with the media plan, take a moment to ask yourself, “What Would Warren Do?”
Dave Eckstein is a Partner in the firm ESA & Company. He specializes in highly profitable market share growth for local businesses and gets a kick out of demonstrating a declining cost of customer acquisition. He plays baseball, but isn't that Dave Eckstein.