• by Joe Mandese  @mp_joemandese, January 11, 2005

Here's a confession you won't find in many trade magazines: When journalists are involved in an editorial awards process, there's always a compulsion to pick the winners based on the most interesting news value their selection would make, not necessarily whether they were the most qualified to win.

That wasn't a problem last year, when we named Starcom MediaVest, our first ever Media Agency of the Year. It was a problem in the waning days of 2004 when we picked SMG once again as our 2004 Media Agency of the Year. "Boring," was the way Erwin Ephron put it.

But Ephron, a recognized expert on agency media services and a member of our 2004 judging committee, nonetheless selected SMG because it continues to be best in class. "In a sentence," Ephron says, "because [SMG] is the successful agency with big clients that isn't still essentially a TV agency."

That was the problem with two of our other finalists, MindShare and OMD, which tied for third place for being, in Ephron's words, "essentially TV agencies." That may have been okay in the past when TV dominated the media mix, but was no longer good enough in 2004 when TV emerged as the medium that requires justification in a broader communications mix.

SMG seems to "take the new communications model seriously and the many skills this requires seem to be better integrated," Ephron explains. That's not to say that Mindshare and OMD didn't produce exemplary work during 2004. In fact, both could have easily been named Media Agency of the Year, if it weren't for the way SMG and our No. 2 selection Carat distinguished themselves as full-fledged communications shops.

Indeed that selection, and ultimately that ranking, was virtually preordained when the agencies were selected by Procter & Gamble in the summer of 2004 to handle their communications planning account. The account was clearly the media account review of the year, and remains one to watch for potential impact on the future of the media services business.

The problem for Carat, and the reason it didn't take first place - this year, anyway - is that it's still largely an agency that has the potential to do something new, innovative, and industry-leading. The potential must become proven.

"Carat remains full of energies and enthusiasm but its arguments are more internal, team spirit, than technical," notes Eudes Delafon, founder and researcher-in-chief of the RECMA, and a member of MEDIA's judging committee.

Or as, Mike Lotito, president of MediaIQ, and another member of the committee, put it: "One success does not make you the best of the year, even if it is P&G. Carat still needs to prove itself with results." Ephron was more blunt: "They're trying hard to be Starcom. Maybe next year."

But the surprise winner of 2004 turned out not to be a media agency at all, but a sublimely integrated media department of a full-service agency - Fallon. While it was disqualified from winning Media Agency of the Year on those grounds, and the fact that it outsourced broadcast buying duties to SMG's Starlink, its work was strong enough that we created an entirely new category: Best Media Department of the Year.

TargetCast, a three-year-old media shop that despite its size and youth, demonstrated that you don't have to be humongous to think big. The agency has all the right ingredients to be Media Agency of the Year: a smart and original approach to consumer-based communications planning, strong senior management experience, and a great new business record. But like Carat, the judges felt the agency needs time to prove itself, making TargetCast an agency to watch.

As for Mindshare and OMD, both agencies had strong new business records and continued to dominate in TV buying and innovation. Mindshare's branded entertainment work for Sears, Roebuck & Co.'s "Extreme Makeover: Home Edition," and client-driven program development deals like "The Days" with ABC, became the benchmark for product integration deals in 2004. OMD continues to evolve its communications planning approach. "Their approaches to integrating brands with TV and integrating TV with other media are imaginative and outstanding," Ephron notes.

GOLD
STARCOM MEDIAVEST GROUP

The concept of "agency of the year" is naturally subjective. But when it comes to making an assessment about "the best," you need to get beyond perception. So you look to organic growth - new assignments from existing clients - is a critical measure because more than any other, it suggests that the agency is impressing clients and winning their trust and favor.

Then there is new business, and while most agencies can't guarantee the level of new business activity during a given year, it's important to be invited to the dance as often as possible. Growth is particularly complex in mature markets like the United States, where account shifts are cyclical and conflicts often dictate agency players that can participate in a pitch, and those that can't.

Finally, an agency can be assessed by means of the all-important return on investment metrics. While numbers can be interpreted any number of ways depending on how they're sliced and diced, but you really can't argue when it comes to new business. Therefore, you can't argue that 2004, like 2003, was Starcom MediaVest Group's year.

How does an agency keep from being a flavor of the month? It's essential for agencies to develop new practices for entertainment marketing, sponsorships, and events, along with multicultural expertise. It's the continuous drive to develop new expertise that will help cultivate new opportunities and revenue streams that distinguishes progressive agencies like Starcom.

And MEDIA's agency of the year, Starcom, is a standout, according to Olivier Gauthier, associate and international senior researcher for the Research Company Specializing in Media Agencies (RECMA). "[Starcom] does not repeat the same facts.," he says and notes that they place a high value on the use of innovative technologies and research. "They're the real 'missionaries' of this industry," Gauthier says.

Starcom also received kudos for its impressive list of new business wins, including the consolidation and expansion of the Procter & Gamble business, Sara Lee, MasterFoods, Heinz, General Motors'outdoor buying, Applebee's, Oracle, Allied Domecq, Barclay's Bank in the U.K., Wrigley in Asia and Canada, and others. There were no losses after review.

And if the true litmus test for success is the ability to win additional assignments from existing clients, SMG was unstoppable in 2004. The agency expanded its global partnerships with clients like P&G, Kraft, MasterFoods, Coca-Cola, General Motors, and UBS, to name a few. Still more organic growth was earned by Starcom's "diversified services" units which won assignments from clients like Kraft, Coca-Cola, U.S. Army, Allstate, Sara Lee, Lego, Miller, and MasterFoods.

Hands down, Starcom's most important win was the $4 billion P&G communications planning pitch. Starcom expanded its business with P&G and managed to score the lion's share of the consumer packaged goods giant's account, more than 80 percent of it, while Aegis' Carat scored duties for baby, pet, and family care products, along with snacks and beverages.

Starcom increased its P&G duties from 65 percent of the P&G planning business to more than 83 percent. The four categories consolidated within SMG and the percent of overall business they represent for P&G are: beauty care (29 percent); fabric care (11 percent); health care (25 percent); and home care (18 percent).

With P&G, Starcom has an opportunity to truly show the industry the substance behind communications planning. After years of industry talk about the virtues of "media neutrality" and the need to develop cross-media and cross-disciplines, the future role of the media agency will be charted by the work Starcom does for P&G. As the world's biggest consumer marketer helped change the media industry by spurring ad agencies to "unbundle" media from creative, Starcom will also be making history.

Still, at least one of the judges considered the P&G win Starcom's main claim to fame this year. "Their only impressive win was P&G in my opinion," says Mike Lotito, the president and CEO of auditing firm Media IQ. "The rest of their work was strong but without any standout performances. I think their media stars have shone more brightly in years past. They certainly didn't have a bad year, but it wasn't outstanding."

Nevertheless, Starcom's executive suite is often singled out for its foresight. Jack Klues, CEO-SMG, was viewed by MEDIA's judges as a global media leader who constantly sets the bar higher on contact innovation and new operating models. Renetta McCann, CEO of SMG Americas, is a woman who lives beyond boundaries, pushing her North American brands to distinguish themselves in the marketplace and looking to Latin America for new business opportunities. Rishad Tobaccowala, chief innovation officer, is positioned as the visionary who guides SMG clients through the cluttered and quickly changing media landscape.

McCann's promotion last May to her current role gives her unprecedented control and all-but-guaranteed ascension up the Publicis Groupe food chain. McCann oversees media properties including Starcom, MediaVest, GM Planworks, and Starlink.

The ability to conjoin various assets under media properties - MediaVest, GM Planworks, and Starlink - helped SMG win more than $3 billion worth of reviews in less than a year. SMG's Publicis Groupe sibling ZenithOptimedia pitched Nestlé's $1.5 billion global business with a team that included both Zenith and Optimedia members. WPP's GroupM brands, MindShare, and Mediaedge:cia, also pitched jointly.

Starcom's ability to truly partner with clients and rigorously applied research tools, are also key to the agency's success. The relationship is always grounded in intelligence and insights culled from copious research. The agency considers its Marketing Communications Analytics (MCA) tool, a strategic differentiator when it comes to research methodologies. MCA measures and analyzes various media to determine which deliver the best benefits to particular clients.

Media research veteran Kate Sirkin, SMG's senior vice president, global director of strategic alliances, teams up with a host of research experts around the globe, not only unearthing key insights, but translating their meaning. SMG also has two dedicated MCA experts dubbed "integrated communications planning directors," who are charged with working the data.

Few agencies have invested as many resources into understanding the nature of consumer contact and engagement with media. Starcom continues to experiment with new practices based on emerging technology and consumer trends. Following the 2003 launch of SMG Play, it created SMG Reverb, a word-of-mouth practice, and Digits, a unit that specializes in wireless communications.

"Starcom has struck an incredible balance between deep and insightful research, and smart, breakthrough execution of the idea to reach consumers," said P.J. Leary, chief operating officer of auditing firm Media Performance Monitor America. "Their 'Fueling Brand Power' positioning, which may be considered hype if it were not adequately supported with robust research and smart tools, is really evident in their work and in their approach to problem-solving."

Laura Caraccioli-Davis and her team at Starcom Entertainment have shown the industry that branded content doesn't have to be obtrusive to make a point. Starcom Entertainment's work for the U.S. Army and the History Channel's "Band of Brothers" premiere, and Miller/FX's "Rescue Me" partnership were both featured in The Wall Street Journal. But finessing the Pontiac Give-Away on "Oprah," may have been the highlight of the year for SMG in 2004.

Introduced in 2003, SMG's consumer context planning function now includes more than 25 people across the global network. SMG added two integrated communications planning directors in 2004.

SMG is always on the hunt for sharper insights and has aggressively pursued intelligence on how consumers engage with a variety of media and cultural influences. It partnered with Yahoo! for a study of women's media habits on the Web.

For SMG's prowess on the P&G planning review, its emphasis on research, its communications planning approach, and commitment to broadband video and emerging media, the agency keeps its gold crown for the second year in a row as MEDIA's Agency of the Year. - David Kaplan

SILVER
CARAT

Carat snares a high-profile account and a chance to test its mettle.

2004 didn't start off as a banner year for Carat North America. The agency was summoned to the table for several of the biggest reviews of the year: Coca-Cola Co., America Online, American Express, and M&M/Mars. It came up short when each marketer decided to stay with agency incumbents. In short, Carat seemed destined to reaffirm its reputation as a perpetual second-place finisher, the well-regarded underdog that could never quite get over the hump.

Then, along came the Procter & Gamble communications planning review.

Early in the review process, word came that the consumer-products behemoth wanted to do things a little differently, perhaps begin to wean itself off network television in favor of a more diversified, multimedia approach.

P&G suggested that the winning agency or agencies would show how public relations, sponsorships, product placement, and other forms of emerging media fit into the overall picture. Speculation was that P&G would shift much of its media planning away from the creative agencies that had done most of the heavy lifting, to media agency powers.

When results of the exhaustive three-month review were unveiled, Carat emerged with a good potion of the media planning dollars; Carat took the communications planning assignments for baby, pet, and family care as well as snack and beverages. Starcom MediaVest Group has the lion's share of the P&G business and in fact, extended it; it includes fabric, home, health, and beauty care. Overnight, the perception of Carat changed from Little Train That Could to media heavy-hitter.

While it's probably unfair to read too much into a single business win, especially since it was preceded by several runner-up finishes, the judges were unanimous in saying that Carat's P&G triumph was the determining factor in its selection as MEDIA's agency of the year silver winner. "It was a complete coup de grace for them, coming in as a non-incumbent and winning like they did," says Jarvis Sherman Jarvis & Shaker partner Tony Jarvis.

Adds Media IQ chief executive officer Mike Lotito: "P&G transformed them from being an underdog into being a player. It used to be that they were the wild card in every pitch, 'let's bring in Carat to hear what they have to say,' but now they're right up there. [P&G] gave them the stripe they needed."

Michael Kubin, CEO and managing director of Ionic Marketing, goes further, "Procter & Gamble is the cornerstone of American marketing. Their advertising and marketing relationships go back decades," he notes. "Anytime a relative newcomer like Carat is able to get a piece of their business, that's a nine on the Richter scale."

All this isn't to say that Carat did little else of note in 2004. In addition to the P&G win, Carat came out on top in pitches for a host of A-list brands including Marriott, Gateway, Bad Boy & Sean John, and Chevron, among others. The new business helped drive the firm's billings to an estimated $5.5 billion, roughly a 20 percent jump over 2003's total of $4.6 billion and more than twice its 2000 take of $2.7 billion. Carat employed 810 people in 2001; its roster is now 1,200 strong.

Carat has consistently finessed strong creative work across media, whether in traditional venues (the company now handles $2.5 billion worth of television ads), or emerging ones, like placements within Electronic Arts video games. Two programs seemed to resonate with the judges. The first was Carat's work on behalf of RadioShack targeting young consumers. As part of a push for the retailer's XMODS radio-controlled cars, Carat invaded skate parks, arcades, and other venues in 20 markets across the United States and created an XMODS Racing League.

The second program was Carat's "Impossible is Nothing" campaign for Adidas which launched the company's brand message online. The video ads got top billing on the home pages of Yahoo!, MSN, and ESPN and were streamed more than 5 million times. As a result, more than 1 million users visited the "Impossible" Web site. Research by Dynamic Logic revealed a 24 percent jump in online brand awareness.

"[Carat] truly believes that 'good' is the enemy of 'great' and they appear to work tirelessly to achieve greatness and never settle," notes P.J. Leary, chief operating officer of Media Performance Monitor America.

Carat's internal repositioning also earned high marks from the judges. In 2004, the firm realigned its organizational resources to reasonate better with its communications planning approach. Carat created four new business units: Carat Brand Experience, designed to facilitate everything from mobile marketing programs to street teams; Carat Sponsorship Solutions, which seeks to get clients more bang for their sponsorship buck; Carat Affiliates, which coordinates partnerships with marketing firms; and Carat Digital, which implements the integration of new media platforms like interactive TV with traditional media.

Finally, the judges commended the agency for, among other things, its embrace of technology; Carat Digital managing director Mitch Oscar helped form the American Association of Advertising Agencies' Advanced Television Committee. Carat's research prowess was also cited; the agency teamed up with Maxim on the study, "Media Animals: Young Men's Usage of and Attitudes Toward Media."

"[Carat] has a vision of going beyond what the traditional agency can do," Jarvis says. "They engage the consumer in a very special, insightful way as opposed to the old-fashioned way of bludgeoning the American consumer to death. They came very, very far this year." - Larry Dobrow

BRONZE - TIE
Two giants tie for the bronze award.

Sometimes it's just too close to call. In splitting the coveted bronze between OMD and MindShare, the judges recognized in both companies an important blend of consistent performance, success with clients, and innovations that keep these powerhouses moving forward: OMD's exceptional research and reorganized client services, and MindShare's groundbreaking branded entertainment projects.

In 2004, OMD set out to prove that the biggest media agency on the planet could also remain fleet-footed and sharp-witted. Our judges agreed that this 800-pound gorilla of the media marketplace can still dance, create, and think. Like Mindshare, its partner in winning the bronze, OMD demonstrated the benefits of media ownership: deep, deep product integration and cost-saving opportunities for a range of clients.

Early and exclusive involvement with the Sci-Fi channel's "5IVE Days to Midnight" mini-series resulted in seamless and sensible integration of 10 OMD clients. Unafraid of new technologies, OMD helped Cingular increase its revenue-per-subscriber by teaching adults how to use wireless text messaging. A phone vote integration with CBS's "Survivor All-Stars" series netted 2.7 million messages.

The gorilla went guerrilla in 2004 with a novel promotion for ABC's hit "Lost," deploying mock "pirate radio" spots and thousands of rolled messages in bottles across beaches last summer. As a result, millions of viewers found "Lost" and helped make it ABC's most successful drama premiere in several years.

If "Gilligan's Island" had this kind of push, the castaways might have been rescued by the second episode. "Their approaches to integrating brands with TV and integrating TV with other media are imaginative and outstanding," says Erwin Ephron, principal, The Ephron Consultancy.

OMD resists the notion that big means impersonal. It re-organized client services in 2004 to optimize communication between account teams and the client. "Nissan and Apple are proof of the connectedness [OMD] has with its clients and the risk-taking that closeness breeds," says P.J. Leary, COO, Media Performance Monitor America.

However, size still does matter when it comes to expertise and contacts. OMD continues to leverage some of the deepest research available about the mediaverse on a local and global scale. With Arbitron's portable people meter (PPM), OMD issued the first research on the simultaneous reach of TV and radio, which showed how radio buys enhance a TV campaign's coverage.

Aggressive competitive research led to OMD's ability to secure local TV and radio sponsorship for all 32 NFL teams for its client Visa.

The Yahoo!/OMD "Disconnected" study, which probed the behaviors of 28 people who were stranded without Internet access for two weeks, dramatized for clients how online media has become nearly indispensable. When the gorilla says a medium is here to stay, the argument is pretty much over.

In co-creating and producing the six-part summer TV series "The Days" with ABC, MindShare brought the industry into new and exciting territory in 2004. By owning, rather than renting media real estate, the company offered new opportunities not just for the same old product placement, but for managing TV ad costs.

Its newly formed MindShare Entertainment Group, run by former TV programming executive Peter Tortorici, represents unprecedented cooperation between networks and agencies. MindShare produced some of the year's most impressive examples of branded entertainment by bolting Sears onto ABC's successful "Extreme Makeover" series and expanding a sponsorship into a ubiquitous co-branding venture.

With host Ty Pennington serving as a Sears spokesman and promotion across all of Sears media touch points, "Extreme" is an example of integration with demonstrable return on investment - increased sales volume of Sears' Craftsman tools. MindShare was also responsible for the integration of American Express' integration in NBC's "The Restaurant" and Bravo's "Blow Out."

"They are relentless in pursuit of the next big media idea and will often take significant leaps to get there," says P.J. Leary, COO, Media Performance Monitor America. In fact, despite a reputation for branded entertainment, MindShare leapt in many new directions in 2004.

An "interactive billboard" in Times Square for Unilever's Dove allowed on-site text message voting, while another for Yahoo! Personals in Los Angeles featured a person living and dating for three days, via a billboard. Metrics for programs like these are critically important; MindShare's "MindSet" people meter will daily chronicle media usage via a personal digital device and across non-traditional media including interactive billboards. Constantly re-locating the bleeding edge of media enables MindShare to maintain an unparalleled record for luring and retaining clients.

For five years running, MindShare has boasted $1 billion annually in new business and without losing a single major client in four years. Stouffers, TV Guide Online, Irish Tourism, and Federal Emergency Management Agency are among the agency's new clients; the agency expanded its scope with Unilever and Fox.

The best may be yet to come as the company integrates with WPP's massive Group M conglomerate - Mediaedge:cia, Maxus, and soon, MediaCom. "Mindshare has had great new business success and some amazing, inventive media execution," says Mike Lotito, CEO of Media IQ. "The company is keeping clients very happy and keeping the rest eager to see what comes next." There's bound to be something. - Steve Smith

BEST MEDIA DEPARTMENT
FALLON

Unique strategies are hatched in this creative agency's media department.

When people in the ad business think of the most creative ad agencies, the name Fallon usually comes to mind. So it probably should have come as no surprise that when MEDIA asked people to think about the most creative media agencies, Fallon landed at the top of the list.

Specifically, it topped the list four times when MEDIA held its 2004 Creative Media Awards (CMA). Fallon was the closest thing to a sweep in the competition winning top honors in the radio, multicultural, research, and communications planning categories, besting media shops many times its size on the basis of creativity, originality, and strategic thinking. The Publicis Groupe agency also was a finalist in three other categories.

Fallon's strong performance in the CMAs alone merited its inclusion in MEDIA's 2004 Media Agency of the Year nominations, going up against Starcom MediaVest Group, MindShare, OMD, and Carat. But what we found on the second go-round was that Fallon once again beat the giants in terms of creativity and strategic thinking, and perhaps most importantly, in making the connection between research about consumers, the conceptualization of media strategy, and integrating that strategy with an advertising message.

We also discovered that merely being brilliant is no longer enough to be a best-in-class media agency. An agency needs to be in complete control of the execution and fulfillment of that media strategy, and that is something Fallon, by its own admission, no longer does.

"We finally had to accept that 'the market has spoken' when it comes to the unbundling of broadcast buying at larger media shops, and get out of the TV and radio buying business,"says Lisa Seward, Fallon's media chief. While Fallon continues to believe that "smaller can be better when it comes to buying," Seward says it was becoming impossible for the agency to prove when pitching clients' business.

As a result, Fallon opted to outsource broadcast buying duties to Starlink starting in 2005. Starlink is a unit of Starcom MediaVest Group that services media for smaller, "full-service" agencies. It was a startling admission for Fallon and one that earned the agency a new source of respect for its candor. Nonetheless, it caused our judges to disqualify Fallon as a candidate for Agency of the Year.

"Fallon has done some brilliant planning work, but they just farmed out their broadcast buying, so they haven't provided any groundbreaking execution," notes Mike Lotito, founder of Media IQ, which monitors media agencies' performance.

We had to agree, even though Fallon did lure its first ever media-only account this year for the Starz pay-TV service. Its decision to outsource buying to another agency, no matter how great the rationale, means Fallon is not a "media agency." However, it may have the savviest and most creative media services unit within a full-service agency in 2004. For this reason, MEDIA's editors decided to create a new category, Media Department of the Year, naming Fallon the winner. What the agency lacks in buying capabilities, it more than makes up for in strategy. - Joe Mandese

ONE TO WATCH
TARGETCAST

A small shop has grand ambitions.

The folks at TargetCast TCM (total communications management) like to poke fun at what they call the "multibillion dollar cumbersome behemoths" that dominate the media field. In an era of massive agency consolidation, there is a place, they believe, for a smaller, more nimble firm tailored to independent brands with mid-sized advertising budgets. So far, it looks like they're right.

Founded in 2002 by Steve Farella, the former Havas Media Planning Group CEO, TargetCast is growing like it wants to be one of the big guys. The New York agency averaged about one new business win per month in 2004 and by year's end, was handling media for 13 clients and 32 separate brands, including those of 1-800-FLOWERS, Eight O'Clock Coffee, financial services firm TIAA-CREF, and Wyeth Consumer Healthcare. Annual billings approached $350 million, up more than 500 percent over 2003.

Winning the Wyeth business was a major coup. The over-the-counter drug maker spends an estimated $300 million a year on media. Wyeth handles its buying in-house, but TargetCast will handle media planning for a bevy of familiar consumer brands that include Advil, Robitussin, and Centrum.

"They have established themselves with some decent clients in a tough environment and that deserves some attention," says Mike Lotito, CEO of Media IQ, a strategic media auditing firm.

TargetCast is attracting attention along with new business. After winning the TIAA-CREF account early last year, the agency transposed the 85-year-old brand's traditional media plan that had been local in scope and geared toward a business-to-business target.

The coming-out party for a new national consumer campaign featured a 60-second television spot in the first ad break of the opening ceremonies of the 2004 Summer Olympics. Subsequent buys included sports sponsorships targeting male viewers during college football telecasts on CBS and ESPN, and a sponsorship package built around the Kennedy Center Honors that targeted a more affluent audience.

TargetCast aims to attract clients with budgets in the $10 million to $50 million range, accounts either shunned by larger agencies or, more typically handled by junior-level account managers. Farella and agency co-founder Audrey Siegel are directly involved with each client. Farella and Siegel say they won't take on additional business if they can't maintain direct client contact. Last year's growth spurt set off a hiring spree that lured more than 30 new people.

When MEDIA magazine profiled TargetCast in 2003, Farella flatly said he never expected to see the agency "[become] even a $500 million shop." Clearly, TargetCast will have to manage its growth carefully. - By Lee Hall