The system, called iDesk, has been in development for about a year and is in beta tests with four clients, with the first official release slated for about four weeks from now. Its aim is to provide a way for media planners and buyers to track digital investments without entering them into the system from another program. Donovan was originally built to accommodate buys across traditional media, such as TV, radio, print and outdoor. The company recently updated its applications to make buying spot TV easier. It spends about $50 million a year on research and development.
Donovan recently lost a major client, Publicis' Starcom MediaVest Group, which adopted a new system, MediaBank, saying Donovan hadn't moved quickly enough to adapt to the digital market. The two companies are involved in an arbitration processing, with Donovan accusing SMG of stealing proprietary codes to create a system with MediaBank, in effect reverse-engineering Donovan's software. SMG denies that allegation. The two sides also were engaged late last year in a dispute about when Donovan would end the servicing of its contract, with Starcom appealing for an extension before a Dec. 31 cutoff. The judge agreed with Donovan that it had fulfilled the terms of the contract and rejected Starcom's appeal. Donovan executives declined to discuss the continuing arbitration until a decision is reached.
Publicis' Zenith recently approached Donovan for a new long-term contract, and MediaCom became a client. Other Donovan clients include MindShare, OMD and Universal McCann.
Advertising Age sat down with Chairman-CEO Michael Donovan and President Henry Lawson to talk about iDesk and how it will address the needs of media agencies.
Advertising Age: How did Donovan get to the point where it's working with nearly all the top media agencies?
Michael Donovan: We offer the three legs of the media stool: software, service, and actual data processing and hosting. And we are the only people. Most of our competitors license or sell software. We do the whole thing. That has been one of the keys. The second is -- maybe we were bold -- when I first came into the business there was a media system and an accounting system and they didn't really talk to each other. ... They used to say the good news is integration; the bad news is integration. It's like living in a co-op; you all have to get along. There are a lot of common services. ... We spend a larger proportion of our revenue on research and development than Microsoft does. ... We put back an awful lot of revenue, and it's a private company.
AdAge: How quickly will iDesk be able to evolve with the needs of agencies?
Mr. Donovan: We try to evolve quickly. We try to put a release out every three to four weeks. ...
Henry Lawson: One of the things about having so much of the marketplace ... we see a lot of things. So actually we are responding to requirements of agencies very often before agencies realize that requirement exists.
Mr. Donovan: We have business analysts that we go out and try and see the products out there with the clients. ... The hardest part over 40 years is balancing, having not everyone hate you and do what you need to do so they will hire you. ... They may love you today ... but they will fire you if there is a better system.
AdAge: How have you adapted to commercial ratings? I know the system had some issues handling more-granular data.
Mr. Donovan: We have adapted to the new ratings. ... It will be minute-by-minute probably not by next upfront but by the one after, the '09 upfront.
AdAge: Why did the relationship with SMG end?
Mr. Donovan: Let's put it this way: The New York judge agreed with our position, and so did the arbitrator. We honored our contract, but we are not able to agree to terms, particularly with the intellectual-property issue, which is still pending.
Mr. Lawson: The irony of this whole situation is we actually have long-term contracts with significantly more than half of the total Publicis business in the U.S., and we also have contracts in the U.K. We would happily welcome back Starcom MediaVest on absolutely normal terms for a client of their size. There is no bad blood.
AdAge: But with so few major players in the media-buying space, isn't losing a major network like SMG a blow?
Mr. Lawson: The total loss for DDS is less than 5% of our total revenue and ... we've replaced a significant piece of that with MediaCom.