Advertising industry leader tells Tourism to reconsider relationship with GlobalHue
by Clare O'Connor
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Advertising Age's Jonah Bloom
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ONE of the advertising industry's most respected figures has offered advice to the Bermuda Department of Tourism following this week's Special Report by Auditor General Larry Dennis: reconsider your relationship with GlobalHue.
Jonah Bloom, editor-in-chief of revered industry title Advertising Age, told the Mid-Ocean News that media vendor mark-ups as high as those detailed in the report seemed "completely out of whack". The Auditor General's report revealed that media buyer Cornerstone Media, under contract with Bermuda Tourism's US agency GlobalHue, had been receiving commissions as high as 171 and 186 per cent, resulting in an overpayment of approximately $1.8million. The average mark-up on Cornerstone's 2008 invoices was 51 per cent – a figure Jonah Bloom deems "extreme".
"There's a lot about this that smells wrong," he said yesterday.
"If this is purely a mark-up for media planning and buying services, it is completely out of whack with a typical percentage. These days on a large account, say $100 million, it can be as low as two or three per cent. On an account as small as Bermuda's $10 million with GlobalHue, it'd be a very nice piece of business to get much more than ten per cent if we're talking media placement, planning and buying."
Mr. Bloom believes the Department of Tourism's relationship with GlobalHue represents an outdated format. He particularly sees Bermuda's pre-payment for GlobalHue's services as "unusual", particularly in a recession.
"It's a long time since anyone has operated like that," he said.
"Fees are based on man hours, then separately, the media agency would be paid based on a percentage and an added performance incentive if the ads went over well. Agencies would love to pre-bill their clients, but that's rare given the state of the economy. It's certainly unusual to see it pre-billed and it requires an explanation."
Mr. Bloom advises the Bermuda Department of Tourism to "get smarter" about the allocation of its advertising budget, particularly in light of the controversy surrounding money spent on TV ads.
According to the Special Report, the Department of Tourism made a prepayment to GlobalHue of $80,000, part of which went on two 30-second slots to air during a televised basketball game featuring Howard University, Minister of Tourism Premier Dr. Ewart Brown's alma mater.
The Auditor General reported that the ads never aired, and that there is no record of a refund. The Department of Tourism yesterday said the ads did indeed air on ESPN in December 2007.
Regardless, Mr. Bloom questioned whether Bermuda Tourism had carried out appropriate market research to determine whether placing an ad during that particular basketball game would represent value for money in reaching a target tourist market.
"It definitely sounds like Bermuda Tourism might want to review their business and to get a smarter approach to their target audience," he said.
"It'd be important to know not just why this $80,000 was spent, but what was the research? There needs to be strong evidence for putting money against these targets. It'd be interesting to know whether they had a good reason to think that people watching the Howard University game had a particularly strong likelihood of being interested in visiting Bermuda."
He believes Tourism's advertising and marketing dollars would be best spent on Bermuda's traditional target markets like the East Coast US, particularly in an economic downturn.
"Ninety-five per cent of a budget should go on traditional target markets, with five per cent on new markets," he said.
"Like, if you see the African American community as potentially a strong market – but it must be based on research.
"Talk to African American people who have been to Bermuda. Decide whether you have enough insight. I understand the interest in experimenting in new markets.
"But if that's your budget – $10 million – invest in markets where return on investment is high."
