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Mediacom sees nothing but "fast-changing chaos" ahead for the U.S. media environment, says Chairman Alec Gerster.

"We're at a turning point in media where chaos -- fragmenting media, declining network TV ratings and increasing communication channels -- is dominant. Finding your way through it is getting to be harder and harder, whether you're a client or a consumer," Mr. Gerster says.

One way MediaCom fights the chaos is by cultivating internal stability.

"We have one of the most stable groups of people in the industry -- most of us have been working here, together, for 15 or 20 years. At 50, I'm the old guy. I've known many of these people for most of my career," he adds.

MediaCom was formed by New York-based Grey Advertising as the latest in a series of media departments reformulated by major agencies. But MediaCom had been taking shape for several years, through Grey's in-house media-buying department run by Mr. Gerster, previously called the Media Connection.


On its own, Media Connection was attracting clients and developing expertise in hot areas such as digital media and local, account-specific retail media, separate from "Mothership Grey," as Mr. Gerster describes it.

"We've had our own identity, working with and without Grey clients for years, and now we're making gains on our own," he says.

About two-thirds of MediaCom's $2 billion-plus in total billings now come from clients claimed as its own, entirely separate from Grey.

Although it had an impressive winning streak in 1998 and claims it lost no accounts, MediaCom didn't win everything it went after. One that got away: Sara Lee Corp.'s $100 million media-buying account, which would have been a tasty addition to MediaCom's growing list of package-goods clients.


Before MediaCom was officially formed, it had a strong reputation in the kids' media-buying arena, where co-managing director Jon Mandel took a lead role in negotiating between marketers of kids' products and the media-selling marketplace.

As the buyer for giant Hasbro's $100 million-plus account, Mr. Mandel is credited, along with Starcom Media Services and TN Media, with influencing marketers and media buyers to adopt a slower, more realistic timetable for making kids' upfront media-buying commitments.

MediaCom also has gotten lots of attention for its work in the digital arena, where it's helping develop "addressable media" -- TV commercials targeting specific households with specific ads. (A test of such media is ongoing with Grey client Kraft Foods and cable TV giant Tele-Communications Inc.)


MediaCom also says it's making significant new investments in research, to give clients advanced insight into consumer behavior and for long-term brand development.

"Clients want more and more from us, as advertising and media become more complicated. We want to stay neutral in the creative process, but clients are asking us for more strategic insights and input on marketing planning, even asking us to take an account-handling approach to their business," Mr. Gerster says.

That includes providing clients with deep, original research on consumer behavior and new-media channels; devising new ways to reach specific audience and consumer groups; and coming up with promotion ideas.

"We have expertise in promotions, point-of-purchase tactics and ways to use media for promotions," says Mr. Mandel. His partner in overseeing such strategic initiatives is MediaCom's Co-Managing Director Dene Callas.

"We're going back to the old days, in some ways, where you had to have a holistic knowledge of your product -- like when one guy at a tire manufacturer knew everything about the account, from TV to print, radio, discounts, trade marketing and point-of-sale promotions," Mr. Mandel says.

But clients say it's MediaCom's powerful negotiating skills and ability to leverage buying power that win them over.

Pharmacia & Upjohn cited the agency's negotiation skills as the main reason it consolidated media-buying for direct-to-consumer pharmaceutical products with MediaCom last year, which already handled the marketer's over-the-counter products. The overall TV, radio and print buying account now totals more than $90 million.


MediaCom won Pharmacia business thanks to its "aggressively creative approach for buying media for various brand needs, as well as their tremendous flexibility and significant marketplace clout," says William Sever, senior VP-marketing for Pharmacia's over-the-counter products.

Luxury brand marketer LVMH, marketer of Louis Vuitton, Moet & Chandon, Schieffelin & Somerset and Christian Dior, awarded its $20 million mostly print account to MediaCom in August after a review, replacing incumbent Deutsch.

"We really searched for the right agency and we feel we found it with MediaCom, because they were able to capitalize on our negotiating power and leverage it in creative ways," said Diane Schwartz, director of media services for LVMH.


But MediaCom's biggest growth in the future may come from less traditional accounts, such as its fast-growing local co-marketing media-buying operations for marketers on behalf of retailers.

For several years, the account-specific marketing agency J. Brown/LMC Group, Stamford, Conn., worked with Media Connection to buy media for localized TV spots backing retailer promotions for its package-goods clients, which currently include Campbell Soup Co. and Kraft Foods. As J. Brown/LMC's business grew, so did MediaCom's expertise in placing TV, print and radio media supporting national marketers' promotions with specific retailers.

"Co-marketing is exploding but very few media-buying agencies have the ability to buy media for it effectively, because it demands extreme detail and extreme precision," says Jon Kramer, president of the Grey-owned agency. "If there's a screw-up the marketer loses more than the media value -- they lose financially with the retailer."


To handle such account-specific media, MediaCom has developed an in-house tracking system for local media buys that's "flawless -- even though the whole operation is like juggling 500 monkeys on the head of a pin. They've really figured it out," Mr. Kramer says.

As media becomes more complicated, solutions demand a more "holistic" way of thinking about brands and marketing, Mr. Gerster says.

"The balance we're striking is control over the specifics, but at the same time taking a broad approach -- understanding the themes, the context and the way changes in Americans' lifestyles will affect the individual consumer and increase the chaos. And the younger the target consumer, the greater the chaos.

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