Led by President-CEO Michael Lotito, formerly president-chief operating officer of Interpublic's Initiative Media, MediaPort's ambition is to create a standardized, Internet-based media management system for buyers and sellers (AA, April 2).
The company is expected to develop a single Internet-based system to manage transactions and payments for traditional and online media buying throughout the U.S. advertising industry.
MediaPort has opened offices next to Manhattan's Grand Central Station. It's brought on a chief financial officer, Neil Schaffer, former exec VP-chief financial officer at dot-com iPrivacy. Mr. Lotito is on the hunt for a chief technology officer and an executive who focuses on business strategy.
"I need somebody on the media side who can start to build the common protocols, work with the consultants we're about to hire and start building this business," said Mr. Lotito. "We are moving."
Grey Global Group and Bcom3 Group's Starcom MediaVest Group have been contacted about joining the new company. Jon Mandel, co-managing director and chief negotiating officer at Grey's media arm, MediaCom, acknowledged the discussions, but a partnership does not seem likely. Jack Klues, CEO of Starcom, said there have been talks between his company and Mr. Lotito, but no agreements have been reached.
Starcom MediaVest and sibling media shop GM Planworks recently signed with Donovan Data Systems.
Donovan is the standard in ad agencies for handling the billings side of media buying. Some media executives believe MediaPort will compete directly with Donovan.
In April, after news broke about the new operation led by Mr. Lotito, Donovan struck a deal with Encoda Systems-the technology company that provides media seller-side transactions-to create new "interfaces" between the companies' technologies.
Ken Breen, senior VP-marketing director at Donovan, said his company has been working with Encoda for more than 10 years. Why the announcement about a new alliance between Encoda and Donovan in April? "We're doing a lot of enhancements," said Mr. Breen, adding it was coincidental that word came right after news about Mr. Lotito's venture.
Many advertising executives believe Donovan is competitive with the new company and had, in effect, done an end-run around MediaPort. Mr. Lotito, who has had discussions with Donavan Chairman-CEO Mike Donovan about an alliance between Donovan and MediaPort, disagrees. "We are not competing with Donovan," said Mr. Lotito. "We want to work with them. They are an important part of the circle."
Added David Netz, director of corporate marketing at Encoda: "This is not about anyone doing an end-run. We are trying to provide incremental enhancements for our users, and Donovan is in the same situation. Their media buyers are saying they want to be able to do things faster and easier."
"We have met with the consortium [MediaPort] several times," said Tony O'Brien, exec VP of LiveWire Media, the parent of Encoda. "They are spending a considerable amount of time and effort deciding what their plan will be. So until they make those decisions, we are entirely open [to discussions]."
According to a high-profile media buyer who has used the Donovan system in the past, and wished to remain anonymous, Donovan not only has offered outdated and user-unfriendly equipment, but also poor customer service. "It's about time someone stepped into the market and gave them a run," said the executive.
"In the old days we weren't that great on the front end," said Donovan's Mr. Breen. "We were a pain in the ass company to deal with because we were kind of stubborn. But we're a new company now. We've made internal management changes at the very highest levels." Donovan improved its products so its systems "look and feel like Microsoft on the front end, and on the back end is the robust IBM e-server," Mr. Breen said. "We are more of a PC shop now than ever."
Mr. Breen said last year was Donovan's biggest new-business year in its more than 30-year history. "We won the Starcom business, the MediaVest business, and GM Planworks and Mediaworks businesses," said Mr. Breen. "We won close to $10 billion in new [media billings] business last year. That's huge."
Donovan's competition includes Mediaplex's AdWare Systems, Datatech Software and Encoda's Datatrak, smaller ventures that generally serve mid-level agencies.
Donovan's clients include Starcom MediaVest, WPP's MindShare and Media Edge, Omnicom's OMD, Interpublic's Initiative Media, Havas' Media Planning, and Zenith Media, jointly owned by Publicis Groupe and Cordiant Communications Group.
Interpublic's Universal McCann primarily uses-and formerly owned-AdWare but uses Donovan on such accounts as Coca-Cola Co. and Johnson & Johnson. McCann last July sold AdWare to Mediaplex, an advertising technology company, for $27.8 million, primarily in Mediaplex stock; that stock has since collapsed in price and is now worth a fraction of its value a year ago.
What media agencies are not Donovan clients? MediaCom and True North Communications' TN Media, which use Datatech and AdWare technology.
Mr. Donovan said he met with Mr. Lotito and the agencies that are backing him. "They told me one of their first missions is to try to set standards for e-commerce. They are uniquely qualified to do that, being an industry body. It is hard for a supplier to set standards. ... I said we welcome that and we expect them to include the current standards."
Could Donovan supply the technology and MediaPort act as the policeman, setting standards? "That's a possibility," said Mr. Donovan. "That's one of the issues that is being put on the table and talked about. We have all the technology."
Mr. Lotito has said one of the reasons why MediaPort was launched was to be able to simplify the process and trim paperwork of cross-media deals done with consolidated media companies. Currently, the Donovan system processes each transaction separately for different media, such as spot TV, cable, print and interactive.
"The paperwork ends up in its appropriate silo," said Mr. Donovan. "It may be negotiated across interactive, cable and print, but it ends up being processed individually. But our new desktop suite goes across media. If somebody wants to work the system that way, we can do it. Nobody has asked us for that yet. We have the capability and technology to go cross media."
While Mr. Breen insists there is no competition between MediaPort and Donovan, he was still left to wonder, "What is there left for the consortium [MediaPort] to do? Because our goal has been to do a lot of these things over the last couple of years."