4As Management 2006

Media Agency of the Year: Starcom

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Starcom MediaVest Worldwide is Advertising Age's Media Agency of the Year for three reasons.

In July, the media buying and planning unit of Bcom3 Group won the record-setting consolidated planning business for General Motors Corp., worth $2.9 billion.

At the end of the year, the Chicago-based agency picked up another monster account, the $800 million consolidated Kraft Foods planning and buying business.

But more significantly, between these milestones, there was the love boat.

"Oh, no, not the Love Boat," says Jack Klues, Starcom MediaVest's CEO. "Don't call it that." The moment came at Nine, a chic new restaurant in Chicago, with Mr. Klues poised to down a forkful of lobster ravioli.

"Why not?" recalls Renetta McCann, CEO of the Starcom half of the media buying conglomerate, seated next to him. "That's what it was Jack, a Love Boat."

The pleasure craft in question was a cruise ship where executives from Starcom and MediaVest bonded for the first time following the official merger last April between the two buying outfits. The ship sailed out of Florida last November to Nassau and on to Castaway Cay, an island owned by client Walt Disney Co.

NO ONE GOES OVERBOARD

One can almost hear the strains of Barry White crooning in the background. "The idea was to put all of the senior managers in one place and make sure they couldn't get away from each other," says Mr. Klues. "No one went overboard."

"We had a terrific time," says Donna Salvatore, CEO of MediaVest in New York. "Just in terms of doing sports together, having dinner and just hanging out together. We had work time together, too."

To win Advertising Age's top media agency honors, an agency should not just win big accounts, it also should tackle business problems in a smart and creative way. The Love Boat was an important reason why the operation tipped the balance in a competitive field of media agencies vying for the top slot, including WPP Group's MindShare and Zenith Media, which is jointly owned by Cordiant Communications Group and Publicis Groupe.

The cruise was crucial because it helped solidify the working relationship between the two recently merged entities; Starcom MediaVest now claims $16.5 billion in worldwide billings and 2,950 employees.

"When we put the companies together, we found out that after years of being competitors, we were actually two sides of a coin," Ms. Salvatore says. "In fact, the reason we were so competitive was that we were so similar. We shared a number of clients from a business standpoint."

MediaVest, the media arm of MacManus Group's D'Arcy Masius Benton & Bowles, has been the home since 1993 of much of Procter & Gamble Co.'s media buying business, about $1.2 billion worth. It also handles Coca-Cola Co., Pillsbury Co. and some General Motors business. Last year, MacManus struck a deal with Leo Burnett Co. and Dentsu to create Bcom3. Prior to that merger however, Burnett's media agency, Starcom, had been talking to MediaVest about working together in secret meetings that were code-named "Project Gorilla." Starcom also handled Coca-Cola, Pillsbury, P&G and GM.

TRUCKLOAD OF WORK

"We did a truckload of work together," says Kevin Malloy, then MediaVest's chief operating officer. "We did a lot of preliminary work, basically laid down the blueprint for [Starcom MediaVest]. We had the blessing of our parent companies because our focus was on serving

the clients."

Project Gorilla, which commenced in 1998, was finally shelved. However, insiders suggest that it paved the way for the larger merger that created Bcom3 the following year

"I'd like to think we had something to do with that," Mr. Klues says. "But I can't confirm it."

When Starcom and MediaVest finally consummated their union-with Mr. Klues as CEO of the combo, Mr. Malloy as president of Starcom MediaVest International and Bob Brennan, the former chief operating officer of Starcom, as Starcom MediaVest's chief operating officer-the voracious operation began gobbling up new business separately and in tandem. Besides consolidated GM and Kraft accounts, there was the win of the U.S. Army's $100 million media business; Bristol-Myers Squibb Co.'s consolidated international media business; Polaroid Corp.; DirecTV; and Showtime, among others.

Starcom MediaVest calls itself a holding company with two separate branded agencies that both cooperate and compete for business domestically. This means the staff will hold hands on an account, or duke it out for the work. For example, the agencies' powerhouse buyers, John Muszynski, exec VP-chief broadcast investment officer at Starcom, and Mel Berning, president-U.S. broadcast at MediaVest, will both attend this year's national broadcast upfront sales pitches. "Mel's a good guy, very talented," Mr. Muszynski says. "But we won't be comparing notes."

A NUMBER OF DIFFERENCES

Although there is a lot of talk in public about these two agencies being mirror images of one another, there are a lot of differences. MediaVest has a strong media programming department, led by Jeffrey Grant, president-worldwide programming, who puts together TV shows and movies for clients such as P&G and Kraft. On the other side, there is Starcom Entertainment, led by Laura Caraccioli-Davis, VP-director, who finds advertising opportunities, such as events and product placement, within the entertainment industry.

At Starcom, Wally Hayward is VP-director of sports marketing. There is no corresponding department at MediaVest; however, both shops tap into Mr. Hayward's talents. Rishad Tobaccowala is the president of Starcom IP, the digital unit of that agency. Although MediaVest has digital and interactive specialists, they do not have a separate branded department. Mr. Tobaccowala's mission is to expand the entire group's offering by corralling those MediaVest specialists into an organization that will essentially be a Starcom MediaVest IP.

EXPENSIVE TOOLS SHARED

The philosophy behind the merger has been to share expensive marketing tools such as optimizers and econometric modeling processes. For example, Kate Lynch, exec VP-global research director, is currently developing sophisticated research tools such as neural networks and genetic algorithms that will be available to both agencies.

"This whole thing is all about coming together," Mr. Klues says.

One thing that will never change is the stark difference in office cultures. MediaVest occupies a high-power suite blocks away from Viacom and the Ed Sullivan Theatre. Senior executives have their own offices. Mr. Grant's office resembles a Hollywood movie mogul's digs with a view of Broadway and Times Square, film posters on the walls and signed celebrity pictures.

DEMOCRATIC LEVELING

The Starcom offices in Chicago, on the other hand, are an example of a kind of democratic leveling. As Jay Chiat is known for revolutionizing the concept of creating open office space for creatives to foster breakthroughs, Mr. Klues may eventually become known for revolutionizing the media agency environment by insisting on cubicles for all, including himself and Ms. McCann.

"It's a symbolic gesture," explains Lena Peterson, Starcom MediaVest director of communications.

"Yeah, but I'm not gesturing," says Mr. Muszynski, who hasn't moved yet to a cubicle from his office, which boasts a panoramic view of downtown Chicago. "At least until I'm told I have to."

The challenges confronting Starcom MediaVest this year have less to do with outside pressures and competition then with the internal issues resulting from their merger.

"We don't benchmark ourselves against any organization anymore," Mr. Klues says. "We had to when we were getting started because we were a little late to the whole specialist game as a global entity, but early as a U.S. organization. So we saw benchmarks overseas. But now that we are established and the pace of the industry is so quick, by the time you look back over your shoulder, it's too late. You have to move on to something else."

STRUGGLES SEEN

Moving on, Starcom MediaVest will certainly struggle with reconciling its dual competing national network buying operations. Similarly, it must convince respective blue-chip clients that two separate operations can exist side by side and yet be separate so as not to compromise each other's marketing plans.

Also, GM Planworks, which was created by Starcom MediaVest to handle GM's media planning, will have to learn to cross over to yet another venue, working with another competitive shop-Interpublic Group of Cos.' GM Mediaworks, which handles the media buying for GM. There has been much talk in the industry that Starcom MediaVest would make a play to acquire Mediaworks and thereby consolidate all of GM's media business at one shop.

Mr. Klues brushes away such notions. "I'm going to see [Mediaworks CEO] Rick Sirvaitis next week," Mr. Klues says at lunch. "We're going to work together just fine."

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