MEDIA's Agency of the Year 2010: Holding Company: Mediabrands

Meet a company striving for perfection

turbotaxMEDIA has selected Interpublic's Mediabrands as its "agency holding company of the year" - for the second consecutive year - but a more apt honor might be the "anti-holding company of the year." That's because, with the exception of certain centralized resources and financial disciplines, Mediabrands hasn't been operating much like traditional holding company, which typically is all about gaining operating efficiencies while aggregating market share. Yes, Mediabrands does that too, but what differentiates the organization from the rest of Madison Avenue is the entrepreneurial spirit that pervades everything it does. In effect, it operates more like a ventures group responsible for fueling new ideas, businesses and business models. It's a smart, pragmatic approach, because it recognizes two important realities about the media services marketplace: that there are a diverse array of clients searching for solutions that reflect their specific business needs; and that the marketplace is evolving so rapidly that the kinds of media and marketing services that dominate today may not necessarily be the ones that succeed in the future.

Mediabrands has managed to address those realities in a way that hasn't destabilized but has actually strengthened its core client service organizations, global media networks Initiative and Universal McCann, which still comprise the bulk of Mediabrands' revenues and direct relationships with marketers. As those agencies are, and as much as the collective resources of Mediabrands have made them better, the approach recognizes that there are marketers who have unique approaches to media that traditional media agencies simply cannot manage. To handle them, you need to blow up old models and reinvent a few wheels. And that's what Mediabrands spent much of 2010 doing, whether it was inventing a hyper-local media shop like Geomentum or creating a shopper media agency such as Shopper Sciences, two Mediabrands units also being recognized in new agency of the year categories this year. Importantly, it didn't create these ideas in a vacuum but studied, experimented and nurtured them as part of Mediabrands' ongoing tracking of how technology changes the way consumers interact with media and how that, in turn, influences the way marketers and brands can communicate with them.

The most visible example of Mediabrands' scientific approach is Interpublic's Emerging Media Lab, which has been in the forefront of curating and testing the latest media platforms and technologies. Given Mediabrands' spirit for venture, it's not surprising that 2010 was also the year that it chose to take the lab from theoretical to applied science, using it not just to monitor changes in the media marketplace, but to actually create them. Shopper Sciences, in fact, was one of those experiments brought to application. Actually, it was a series of research and partnerships that former Emerging Media Lab chief John Ross participated in that led to the formation of Shopper Sciences, which you can read about elsewhere in this issue.

And when Ross took his new agency model out of the lab, Interpublic turned it over to another inquisitive mind - Universal McCann social media guru Brian Monahan - and gave him the charge of finding ways of exploiting the lab's unique vantage point and turning other next-generation ideas into businesses or applications. One of them, fittingly, is applications - the programmable kind. Monahan has been leading a team of the lab's scientists in a quest to bring so-called APIs, or "applications-based interfaces," directly into online display ads, making them dynamic and capable of receiving data that instantaneously updates their relevance to specific consumers.

"We believe the next generation of storytelling will be fueled by dynamic data elements," Monahan explains. "An app is one way of thinking about it, but what they really are, are display ads that scale by calling dynamic data."

To illustrate how an API-based ad might work, Monahan gives an example of a banner ad for an allergy medication brand that has an API connecting it to a real-time weather database updating pollen counts so that could be relevant to a consumer's decision to use the brand. Other obvious applications could tie into any real-time databases connecting ads to dynamic, relevant databases about weather alerts, traffic patterns or even social media feeds from Facebook, Twitter, or just about anywhere else a strategist, creative or programmer could think of. The barrier, says Monahan, is no longer technology but the way Madison Avenue thinks and is organized.

The API approach, coupled with the launch of Shopper Sciences and Geomentum, illustrate how Mediabrands began taking its lab work from theory to application, creating new platforms and services around next generation media technology. The lab may be the most visible example of Mediabrands' innovation process-guests are literally invited to tour the Los Angeles facility, which added a separate retail media lab within the lab during 2010 to help Shopper Sciences tinker with new technologies and consumer shopping experiences. But Mediabrands fosters a ventures-like approach to everything it does, and not surprisingly, has created an organization within its global organization that does just that. Dubbed Mediabrands Ventures, the unit now represents nearly a third of Mediabrands' 6,200-person global workforce.

Mediabrands Ventures isn't literally a venture capital unit, though it does incorporate that as well. Velociter, a unit within the unit, was created to help Mediabrands identify start-ups and new outside ventures that could be meaningful to Interpublic and its clients. Velociter works with them, as well as so-called "incubators"-companies that provide seed capital, advice and resources for new ventures - to help develop them, sometimes in exchange for equity stakes or preferred business arrangements.

Velociter is a formalization of a long history Interpublic has had staking new media start-ups, the most notable of which is Facebook, and Interpublic's initial multimillion dollar investment in the social network now believed to be worth hundreds of millions - on paper, of course - but the strategic value to Interpublic's media agencies and clients may be incalculable.

The executive who struck that seminal Facebook deal, Bant Breen, has been a key player in the formation of Mediabrands. He currently oversees Reprise Media, a search and social media specialty shop that he is repositioning to focus on what Breen calls "intent-based" marketing, because both online search and social media are indicators of a consumer's intent. Interestingly, Reprise is one of the few parts of the current Mediabrands organization that was acquired from the outside. Unlike the bigger agency holding companies it competes with, Interpublic's Mediabrands grows most of its new service businesses from in-house expertise.

Mediabrands Ventures, which is run by CEO Matt Freeman, approaches its "ventures" activity in three ways. The first, Freeman describes as "operations," and involves working with Mediabrands' existing organizations to identify new business services that can be grown via their existing organizations. The creation of Geomentum is a good example of that, because it was created by merging all of Interpublic's existing local media operations - NSA, Wahlstrom and OAG - and building a new team of modelers, analysts and consumer insights pros to identify new ways targeting consumers via local media.

The second phase, Freeman refers to as "incubations," which are entirely new businesses that Mediabrands incubates from within, tapping the expertise and entrepreneurial spirit of venture-minded employees or executives. John Ross' Shopper Sciences is a good example of that approach, as is Cadreon, the sophisticated online-based audience-buying system Mediabrands launched in 2009, which continues to grow and evolve.

The third facet of Mediabrands Ventures is actual "investments," sometimes, but not necessarily for cash, in outside ventures and start-ups that would round out Mediabrands' portfolio. Mediabrands formalized that last element with the creation of Velociter, and tapped one of the best known "VCs" on Madison Avenue to oversee it: Tim Hanlon, a long-time expert on new media who cut his teeth at Publicis, and who was the lead ventures executive on Publicis' Denuo team. Hanlon, who already has deep roots and connections within the venture capital communities stretching from Silicon Valley to Silicon Alley, with a few stopovers in his home base of Chicago, is casting a wide net and plans to have dozens of relationships with promising start-ups within the next year. One of the first is a New York start-up called Spongecell that has created a sophisticated new way of delivering a marketer's content into dynamic banner ads, leveraging the kind of API approach that the lab's Monahan refers to.

The goal with all of Mediabrands's ventures, whether incubated in-house or via an external strategic investment, is to identify and fuel the development of new products and services that will ultimately give Interpublic agencies and their clients a competitive advantage in the marketplace. But they may also lead to new products and services that have their own freestanding market potential.

That was the case when the lab helped develop a new dynamic and inexpensive video screen technology capable of transforming virtually any class surface into a touch- or gesture-sensitive, full-motion video screen. Dubbed the Magic Window, the acetate-thin screen can be applied to dressing room mirrors in retail outlets to transform them into an interactive shopping assistant or virtually any other screen concept a media planner or designer could imagine. The Magic Window, which is still only an internal working name, has so much potential that Mediabrands is looking at developing it as a standalone product, putting together a marketing plan and team to help sell it publicly.

That team is being overseen by Joe Benarroch, the long-time Mediabrands communications chief who was promoted to CMO and who plans to develop other product and service spin-offs, some of which may be consumer-focused, from the ventures developed by Mediabrands. One of the things that makes the Mediabrands organization unique is its collegial approach to developing businesses and working together to fuel the growth of existing businesses within the organization, whether they be traditional media service agencies like Initiative and UM, or newer specialty units like Reprise, Geomentum or Shopper Sciences. Even more unique, is the way it is managed. Currently, there is no CEO running Mediabrands' overall operations and the group runs itself via an "office of the president" approach that was in place before founding Mediabrands CEO Nick Brien left the group to takeover -and help transform-one of Interpublic's other most important divisions, the McCann Worldgroup.

Interpublic isn't rushing to fill the Mediabrands CEO slot; however, the organization seems to be doing a good job of running itself, though expectations are that the top job will eventually go to Mediabrands Ventures' Freeman. Freeman demurs at that notion, and says the real strength of Mediabrands is the diversity of its team, especially their unique points of view, which makes for a very rich, uniquely differentiated organization. Freeman calls the approach the "constellation system," an allusion to the fact that all of the people and organizations within it are stars with their own points-of-view, but which in aggregate, form constellation-like approaches to servicing media for clients.

With that approach with one part of the organization, Geomentum, can take a hyper-local view of the media universe, while Shopper Sciences might take the view of a consumer looking at a store shelf. Reprise looks at the intentions of consumers initiating searches or social media conversations. Or barter media division Orion might take a view based on the underlying value of the unsold goods or services of Interpublic clients and what their media market value might be.

But Mediabrands' constellation approach is more of an expanding universe than a set star system; at press time for this issue, it actually shook up Geomentum, restructuring its top management team and bringing in some of the online industry's top players: former Starcom MediaVest Group and Omnicom digital chief Sean Finnegan and former CMO Tony Bombacino to take it to its next phase. Not surprisingly, the next phase of hyper-local media won't necessarily be the kind of traditional media - newspapers, radio, TV, Yellow Pages and outdoor - that have historically been used to target consumers in their own backyards, but will likely be digital approaches, including localized and addressable online, mobile and social media versions. While some of those newer exploits are still under wraps, Geomentum recently did a deal with online video ad server Mixpo to begin placing in-banner video ads on Web sites that are capable of "micro-targeting" users based on their local geography. Interpublic executives said that deal is indicative of the direction that Finnegan and Bombacino would be taking Geomentum and that the unit would also be working closely with other Mediabrands digital divisions, especially search and social specialty agency Reprise Media and digital audience buying system Cadreon, to find more hyper-local ways of targeting media.

In effect, Freeman said the goal is to transform Geomentum from a "specialty agency" focused on hyper-local media to a flagship, full-service media agency whose specialty is hyper-local targeting. More often than not, he said those services might extend beyond conventional media and marketing to reach into other vital parts of a client's enterprises. Given the nature of its focus, that already has brought Geomentum into strategic real estate planning, because its team and systems are capable of identifying which neighborhoods will generate the best returns for a retail marketer to operate a store or franchise in.

While most of Mediabrands' innovation has been about reshaping media to provide new products and services, it has also been doing some important behind-the-scenes work on its own and potentially, on the industry's infrastructure. Mediabrands, which has always been in the vanguard of developing state-of-the-art media management systems, spent much of the year quietly developing new protocols for managing the flow of information between agencies, clients and the media. That system, dubbed M.O.M.S., was initially developed with Microsoft, a Mediabrands client, but by the middle of the year, Mediabrands turned it over to the American Association of Advertising Agencies to make it a true industry initiative.

Meanwhile, Mediabrands was also conducting a review of its own internal media management and processing systems; at the end of 2010, it made the bold move to pull its business out of Donovan Data Systems, the dominant provider of Madison Avenue's systems since the 1970s, and go with VC-backed MediaBank. The decision was based on a number of pragmatic factors, including superior costs, but Scott Beltran, the chief information officer at Mediabrands, said an equally important part was MediaBank's vision for the future and the fact that it utilizes an open source approach that can grow and scale as media becomes increasingly digital and open source as well. MediaBank, which is backed by the same people who created GroupOn, is now run by Bill Wise, a digital native who helped develop online industry trading systems like Right Media and ultimately at Yahoo, which acquired Right. Like everything else about Mediabrands, the decision to go with MediaBank, Beltran said, was based on having a unique, differentiated point-of-view on where the media marketplace is heading and to be in the forefront of helping to develop it.

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