3.5 mil deal lands media buying shop that claims $800 mil billings
Young & Rubicam Inc. will pay about $3.5 million to acquire Media Edge from Adcom, parent of N.W. Ayer & Partners, but price wasn't the deciding factor.
Y&R beat out McCann-Erickson Worldwide and TN Media, a division of True North Communications, for the right to buy Media Edge and its plum AT&T media buying account, with about $330 million in billings. Overall, Media Edge claims about $800 million in billings.
Executives familiar with the negotiations said McCann and Y&R made nearly identical bids, with TN's offer coming in lower. At that point, the decision fell to AT&T, which saw some advan-tages in consolidating network buying at Y&R.
BIG CHUNK OF AT&T ACCOUNT
The deal means Y&R will handle two-thirds or more of AT&T's $660 million in U.S. media buying, including $225 million in network buying. AT&T's roster agencies periodically bid for spot buying assignments on a market-by-market basis.
Some observers were surprised by the low price paid for Media Edge. In comparison, Omnicom Group in May agreed to pay $8 million to $10 million for Creative Media, a New York buying service claiming $225 million in billings. But insiders pointed out that some of Media Edge's billings, along with some of its people, will stay at Ayer. The unit's reliance on one huge client also lowered the price.
ROSTER SHOPS RELUCTANT
Initially, none of the AT&T roster agencies wanted to pay forMedia Edge at all, preferring to have AT&T simply reassign its account. AT&T had to move all creative and media accounts from Ayer after the agency agreed to be acquired by MacManus Group, whose D'Arcy Masius Benton & Bowles handles AT&T rival SBC Communications.
THE GORDON FACTOR
But AT&T made clear it wanted Media Edge Managing Director Beth Gordon to move with its account. Ms. Gordon wanted to keep the unit autonomous.
Y&R will meet those conditions. Media Edge will keep its name and move to Y&R-leased space several blocks from Y&R headquarters. The media buying agency will keep its AT&T work, and Y&R's media department will do the same.
Ms. Gordon will report to Mike Samet in his role as a director of Y&R Inc., not as exec VP-media director for Y&R Advertising.
AYER POST-MEDIA EDGE
Ayer, meanwhile, was still deciding last week how it will structure its media department. Media Edge served in that capacity for Ayer clients and as an independent service for several non-roster clients.
Two recent additions in the latter category were W.B. Doner & Co., Baltimore and Southfield, Mich., and the International Federation of Advertising Agencies, Schaumburg, Ill.
AT&T postponed another decision it has pending: picking a new agency to handle its corporate ads, previously handled by Ayer. The other four roster agencies, including BBDO Worldwide, pitched for the account in early July and have been asked to pitch again in mid-August.
Contributing: Kim Cleland and Chuck Ross.
Copyright July 1996 Crain Communications Inc.