Universal Music Group selected MediaCom as its agency of record in the U.S. The company held a competitive pitch earlier this summer in a move to consolidate the work across its labels, according to industry executives.
With a budget range of $30 million to $40 million, said the executives, the company is nearly doubling its spend in the U.S. compared to 2010. According to Kantar Media, Universal spent $18.1 million in measured media last year.
"The music business is changing. We have the ability to apply social and search to conventional means of marketing," MediaCom North America CEO Harvey Goldhersz told Ad Age . He added in a statement: "We welcome the opportunity to work with our new business partners to change the rules of how record labels promote artists through media."
The firm will handle digital and traditional media for all labels, including Interscope Records and Def Jam Recordings, among others. During the pitch, UMG gave the agencies assignments to promote releases for several labels and artists of different genres, he added.
The assignments will likely go beyond traditional buys and get creative as the music industry moves toward direct distribution. Also, with new online music services like Spotify and Sonos, music companies are attuned to the looming threat to the labels' sales. They're looking at a fresh, digital-heavy marketing approach.
Despite the challenges and past financial setbacks, music sales are up, and 2011 is on track to become the first full year of positive music sales since 2004. The short-term bump is likely contributing to a heftier media budget, which the labels will need if they have any hope of stabilizing success in the long-run.
The agency already handles media responsibilities for Universal in Europe, Canada and Australia.
"Through our relationship in other parts of the world, Mediacom has already demonstrated to us their ability to think and execute boldly in the very complex modern music business," said Andrew Kronfeld, Universal's president of global marketing, in a statement. "Their creative ideas for how to approach media strategy and buying in the U.S. have shown us that they are the right partner for UMG."
For the agency, which lost the $800 million Warner Bros. account and its $1.4 billion GlaxoSmithKline account within a year, it's one more step in the right direction. Under Mr. Goldhersz, who replaced Doug Checkeris earlier this year, the agency recently won the U.S. Tourism and Spin Master accounts.
Universal Music Group labels include A&M/Octone, Decca, Def Jam Recordings, Deutsche Grammophon, Disa, Emarcy, Fonovisa, Geffen Records, Interscope Records, Island Records, Lost Highway Records, Machete Music, MCA Nashville, Mercury Nashville, Mercury Records, Motown Records, Polydor Records, Show Dog-Universal Music, Universal Music Latino, Universal Republic and Verve Music Group.