Magna Global's Brian Weiser Loses $100 Billion ... on Paper, Anyway

Last Updated Jul 16, 2009 11:44 AM EDT

One of the more interesting controversies that's broken out lately in the media and advertising industries is the one involving ad agency holding company Interpublic Group and the decision by the new chief media prognosticator at its Magna Global unit to revamp its decades-old methodology for determining future ad spending, by industry. While lots of entities, including financial analysts, make such predictions, IPG's report has long been the most closely followed, during all of the decades that now-retired Robert Coen spat out the numbers.

But new number-cruncher Brian Weiser, a guy who doesn't shy away from a good argument (I had him on a panel last year and, from a fireworks perspective, it was like the Fourth of July), decided that Coen's way of doing business was no longer workable. So, the result of his new methodology -- more on that in a minute -- is that there is $100 billion less in ad spending in U.S. media coffers. Yes, that's billion ... with a b.

So, what the hell happened?

In a piece yesterday in Mediapost, editor-in-chief Joe Mandese (yes, I do some work for those guys), points out that Weiser is looking at the numbers from more or less the opposite perspective that Coen did. While Coen built his numbers based on the estimates of ad spending that largely come from third parties, who often calculate numbers off the official rate card for a given ad unit, Weiser is putting much of his emphasis on looking at the revenue reported by media companies. As the rate card numbers are often a best-case scenario for how much an advertiser should pay, for example, for a 30-second ad or a full-page spread in a magazine, they don't take into account the widespread practice of discounting, particularly for major advertisers that spend a lot of money with certain media companies. On the other hand, the media company revenue comes largely from public companies, that, by law, have to be honest in what they report. To me, it seems Weiser is looking at the more accurate of the two. (The only caveat about public media companies is that they don't necessarily have to break out numbers for individual media properties within them. Last time I checked, News Corp., for instance, did not have to break out the numbers for MySpace, though Time Warner has always done so for its about-to-be-spunoff AOL unit.)

There are other differences, which you can read about in Mandese's piece, such as the vast spread between Coen and Weiser as to how much of the U.S. media pie is made up of online advertising, but the biggest issue with what Weiser has just done is how it might affect how the other prognosticators out there start to play the prediction game. Will this cause a re-examination of other methodologies, or will others in this business choose not to take the huge leap that Weiser has in telling the ad and media industries to swallow a bitter pill -- that by some reckonings they aren't as big as they think they are?