The company wants to move from start-up "to the No. 1 media communications specialist in the U.S., with $2 billion in billings and a profit of at least $20 million," according to a recruitment document that executive search company Johnson Smith & Knisely is circulating as it looks for someone to become CEO of Carat North America.
That's a big order for a company with no presence in the U.S. just 18 months ago.
Since then, however, Aegis Group, the holding company that owns Carat International-which is Europe's largest independent media buyer-has acquired Media Buying Services, New York; International Communications Group, Los Angeles; and Media Marketing Assessments, Wilton, Conn. Aegis claims U.S. billings of $650 million.
LONG WAY TO GO
But $650 million is a long way from $2 billion.
The strategy to reach that goal is primarily "through the introduction of a superior and distinctive Carat product, focused on differentiated/proprietary upstream services of a strong and expanding base of clients," according to the recruitment document.
In other words, Carat hopes to bring to the U.S. a series of research tools-its product-that mimic what it has delivered to clients in Europe.
"Basically, our start point is to improve return on investment for our clients," says Phil Gullen, managing director of Carat Insight, Carat's London-based research consultancy.
"It goes through many levels . . . It's the difference between. . . somebody actually watching a commercial on TV and somebody actually reacting to a commercial on TV," he adds.
While media buying in the U.S. has been recently guided by the mantra, "Consolidate your media with us and we will be able to use our clout to buy it for you cheaper and cheaper," Carat has focused on "accountability."
Still, the company has no illusions that it will be easy to change U.S. clients' thinking. Most have been trained to believe media are for the most part a commodity, and that a low cost-per-thousand, delivered within reasonable reach and frequency guidelines, is all one needs to know.
"The kind of pitch we're developing is going to go in and out the ears of those clients that have that mindset," says Bruce Dennler, VP-general manager for Carat/ICG, San Francisco, and the person in charge of product development from the planning side.
"Our charge is to find those clients who have an instinctive and in-depth knowledge of media, and who will recognize this stuff for the value it is.
"We're talking about sophisticated clients, those who really understand that their media dollars have to work for them beyond just a grind on a negotiation, which happens anyway," the executive adds. "Ultimately, that becomes self-defeating; you're grinding and finding your ads in areas they don't belong.
"What makes more sense is if you can tell a client that [Carat] can place your media and schedule your media in a such a way that it's going to impact your overall sales, and the increase in sales is going to be more than a 15% reduction in your media cost."
Mr. Dennler says the connection of media to a client's actual product sales is what has helped Carat make its mark in Europe, and that's a large part of what the company wants to bring to the U.S. for clients from Alberto-Culver Co. to Van Melle.
One of the first products Carat hopes it can bring over to the U.S. is called Foretel.
"It measures the [TV] attention levels by looking at attention to specific programs," said Mr. Gullen. "The way we do that here is by looking at attention levels by program genre, by channel, by dayparts, and come up with a plan that not just gets a certain number of ratings for a client, but maximizes the number of people exposed while paying attention to TV. . . . Some shows are more involving than other shows, and we've got a way of quantifying that to give a bigger return to the advertiser."
The idea sounds similar to one already developed in the U.S. by New York-based DDB Needham Worldwide's Optimum Media. That program, called OnCore, is based on the premise that viewers who are loyal to a particular series are more likely to buy a product advertised on that show.
Page Thompson, DDB Needham's U.S. media director, says Carat is going to get a wake-up call in the U.S.
"They're going to have to be willing to invest a ton of money; [plus] the data that exists [are] not as sophisticated," he says. "We have invested $350,000 a year of our money to do our own research-some with Nielsen Media Research, some with a lifestyle study-for OnCore."
logic makes sense
But Mr. Thompson is convinced Carat is right in its thinking that the media model in the U.S. must change, and that research is the key.
"Probably the most important people in an agency are going to be media research people," Mr. Thompson predicts.
Indeed, the first hire Carat North America has made, even before finding a CEO, is Joanne Burke, the former research guru at True North Communications' TN Media.
Ms. Burke, director of worldwide media research at Carat MBS, New York, says, "When full-service agencies in the U.S. pitch business, they quite often pay lip service to research, but it's only lip service. At Carat it's a way of life."
Much of what Carat wants to do is media optimization (see story on Page S-2). "That's choosing the most efficient television schedule based on respondent-level ratings data," Ms. Burke says, "based on reach and frequency and cost."
Years ago, she notes, a rudimentary form of optimization was available through software programs "that really didn't work very well, so optimization in the U.S. has been a dirty word. We need to change that attitude."
But some media executives here are skeptical about how fast U.S. media habits can change-not the least because Nielsen still does not routinely provide agencies with minute-by-minute ratings information. Nielsen is considering such data for next year.
"People have been talking about media accountability for years," says Arnie Semsky, exec VP-worldwide media director, BBDO Worldwide, New York. "It would be nice to make media more accountable, but I don't see any impact coming out of that."
U.S. agencies that are part of an international network are quite aware of Carat's European success.
"We know all the techniques in Europe," Mr. Semsky adds. "We've either developed some ourselves over there or have pitched against Carat."
He also says BBDO's U.S. media mission is similar to Carat's.
"What's the best way to figure out our client's return on their media investment, both from a qualitative and quantitative perspective? That's what we're trying to develop," he says.
How has it gone thus far getting research tools in place in the U.S. to carry out that mission? "Slow," says Mr. Semsky, "slow."