After splitting Procter & Gamble Co.'s big communications review-SMG landed much of the business, but Carat fought its way onto the roster-Mr. Verklin joked, "I like to tease [SMG CEO] Jack Klues that `Carat is just trying to stay in [your] rear-view mirrors.' "
Well, so is everyone else. Under Mr. Klues' leadership, Publicis Groupe's SMG, which includes Starcom USA, MediaVest, Starlink and Diversified Services, topped U.S. media agencies in 2004.
SMG determinedly performed the tasks asked of all marketing agencies at a time when consumers click past ads and increasingly turn away from network TV: finding new ways of putting marketers' brands in front of consumers.
That leadership in navigating the changing media world, combined with an unrivaled new business record and innovation on a tactical level, made SMG a lock for Advertising Age's U.S. Media Agency of the Year. SMG prevailed in pitches, including as the incumbent on the P&G win, picking up brands including Downy, Actonel, Pantene and Mr. Clean. Its General Motors Planworks division helped launch the headline-grabbing "Oprah" giveaway of 276 Pontiac G6 cars. MediaVest created an 8-minute animated film touting P&G's Tide tied into the holiday broadcast of "Samantha: An American Girl Holiday" on Time Warner's WB network. Starcom USA led SAB Miller's Miller Brewing Co. into branded entertainment.
Carat was Starcom's toughest competition for this award, which makes Mr. Verklin's ribbing to Mr. Klues ironic. It "encourages us to see how much faster we can" go, says Mr. Klues, who in December was promoted to Publicis' management board, underscoring SMG's importance to the holding company.
A leadership position in media is SMG's to lose. Besides being the largest buyer in the country, SMG benefits from a strong culture-forged in Starcom's origins in Leo Burnett USA and MediaVest's beginnings in D'Arcy-as well as an exceptionally strong management bench. It also has a compelling track record in coming up with business solutions and finding ways to meet clients' needs, ranging from crafting holistic media plans to using branded entertainment to generating public relations value.
HARD TO BEAT
"They're hard to beat," says Linda Fidelman, CEO of media search company Advice & Advisors.
Marketers are satisfied with the results. Miller opened a branded entertainment front against Anheuser-Busch last year, creating short films that aired on ESPN and striking a brand integration deal with FX's edgy "Rescue Me."
Starcom demonstrates "an understanding of our brands and our key legal-drinking-aged audiences, both of which allow for media plans and investments that have greater impact," says Dave Genel, director-media services for Miller.
That said, there are bumps on the road for SMG and all other media agencies. The new-business environment is fairly stagnant. Procurement officers are eyeing cost cuts. Marketers increasingly demand to know what return they're getting on their investment.
Mr. Klues concedes his agency, along with the industry, needs to do a better job on ROI, citing new tools and techniques.
"We're hit and miss in being able to articulate and really show the value we can create," he says.
Still, SMG is in "a powerful position right now and they're working that very well," says a media search consultant who asked not to be identified. To slip, "they have to mess up."
It's doubtful the team in place will allow that. Renetta McCann, who in August was promoted to CEO of SMG-the Americas from CEO-Starcom North America, is a highly visible figure within the industry. John Muszynski, a 24-year agency veteran, was named CEO of Starcom in February from managing director-investments and operations.
Starcom brought in two high-ranking outsiders to bolster its ranks: Steven Feuling, former senior VP-marketing officer of Kmart Corp., as its first-ever chief marketing officer and Elizabeth Herbst-Brady, exec VP-advertising sales at Universal Television, as senior VP and director-broadcast investment.
At MediaVest, CEO Laura Desmond last April created her executive committee consisting of President-U.S. Broadcast Donna Speciale, as well as three newly promoted exec VPs: Richard Beaven, Lisa Donohue and Bill Tucker. The reorganization was a sign of Ms. Desmond putting her imprint on the agency .
BROAD VIEW OF MEDIA
SMG has demonstrated a broader view of media than most of its rivals. It was early in the interactive space. It launched event marketing/sponsorship operation Relay in 2001, and, led by CEO Wally Hayward, Relay has grown to five offices and 116 employees.
The agency continued its pioneering ways in 2004. It opened Digits, a wireless communications agency, and Reverb, a word-of-mouth shop. It also pushed forward with its Video Investment Group, a planning group that takes a media-neutral view of visual media-whether it be TV, broadband or other forms of visual media.
"We've seen consumers changing the way they interact with media and content," says SMG Exec VP Rishad Tobaccowala, helped develop these initiatives and is chief innovation officer for a group that oversees all Publicis media agencies. "Part of my job is to keep [the senior SMG executives] nervous" with new ideas.
The agency also points to specialized planning practices devoted to its biggest accounts. SMG's first such effort came in 2000 when it created GM Planworks in Detroit to service General Motors Corp. It has steadily netted more GM business since its inception and last year won out-of-home buying.
GM Planworks "brought the ability to plan more holistically," says Betsy Lazar, general director-media and advertising operations at General Motors Corp. GM Planworks played a key role in making the case for the Pontiac G6 giveaway on "The Oprah Winfrey Show." The agency estimated the program's PR impact and set up interactive tools-such as buying search engine keywords-to help.
The net result: A program that cost less than $8 million in cars led to unpaid media coverage and PR valued at estimated $100 million, according to SMG. It created instant brand recognition for the new model, which recently hit dealers.
Moreover, GM Planworks was the template for the MediaVest's Coke City, a unit that specializes in servicing Coca-Cola Co., and P&G United to handle Procter & Gamble. SMG now does communications planning, everything from events to advertising, on home, beauty, fabric and healthcare brands representing most of P&G's ad spending.
"We're seeing the age of [communications] planning come into being," Ms. McCann says.
Besides going deeper than ever into clients' planning needs, Starcom is expanding the host of services it offers marketers. For new clients Oracle and Autodesk-as well as Sun Microsystems, an account acquired in 2003-the agency is taking on account management duties and helping manage the creative production.
"We went in there and showed them how we understood the business and shared with them ideas that improved" it, Mr. Muszynski says.
SMG's success on these multiple fronts has made it an increasingly important part of Publicis. SMG, which has racked up double-digit growth over the last three years, posted about $600 million in net revenue globally in 2004, based on Ad Age estimates. That's about 12% of Publicis' total 2004 revenue of $4.9 billion.
Nothing demonstrated that more than Mr. Klues' promotion earlier this year to Publicis' managing board, where he joins the leaders of the Publicis and Saatchi & Saatchi networks.
And Mr. Klues clearly understands SMG's importance to Publicis. As an executive he stresses the importance of keeping costs down. He knows that SMG has its work cut out for it to help Publicis meet future financial goals.
SMG's mandate can be summed up in three words: "grow, grow, grow," Mr. Klues says.
* The Coke account, with $350 million in billings, is still one of Starcom MediaVest's biggest.
* Starcom led Miller into branded content, including Web-based video, to reach its target market.
* P&G deepens its Madison + Vine efforts such as its ties with reality TV series "Survivor."
* The Pontiac G6 giveaway on "Oprah" cost $8 million, but generated about $100 million in PR.
* MediaVest created an animated Tide film linked to the made-for-TV "American Girl" movie.