• by David Kaplan , December 7, 2004

Immense changes in technology and media consumption have led media companies this year to what Doug Flynn, CEO of Aegis Group, refers to as "a communications watershed."

In speaking at the UBS Warburg Media Week Conference in Manhattan on Monday, Flynn pointed to the Procter & Gamble's review this past summer, a portion of which was won by Aegis' Carat, while the lion's share went to Publicis Groupe's Starcom.

Flynn quoted Cindy Tripp, associate director of North America media and marketing at P&G, when she told MediaDailyNews after the win was announced: "Really, truly we've restructured and designed for the new world and not for the old world and that's why they won the business."

"In the past, media agencies were hired to execute buys," Flynn said, speaking in one of the ballrooms at the Grand Hyatt Hotel. "We still have to deliver outstanding buys, but now we have to engage in leading the total communications plan. The big idea of 2004 is that communications planning will be the dominant area."

Flynn added underlying communications planning is the increased importance research and collaboration among the holding companies properties. Again referring to the P&G business, he credited the help of Carat's sister agencies Synovate and Censydiam.

"We are seeing more and better synergy between research and media in terms of product development, new business pitching, marketing, and most importantly the ideas that help us to better understand the way in which consumers relate to brands and how those same consumers develop their ideas about brands through communication," Flynn said.

In his presentation later that same afternoon, Interpublic Group's David Bell also spoke about developing new ways of reaching the "atomized individual" and on pursuing greater collaboration among holding company properties.

"In the 1990s, there was an acquisition culture," Bell said. "We now realize that we have to get those companies under our umbrella to work more closely together." He pointed to the work done on Bank of America's business, which encompasses the work of over a dozen IPG agencies.

Bell said that the greater emphasis on such moves was part of its "turnaround in progress." One of the important building blocks was Magna Entertainment, which created 47 hours of programming - and had some participation on 135 hours of programming - last year.

In terms of their financial outlooks, Martin Sorrell, WPP Group's chief executive, expressed guarded optimism for 2005 - while Jeremy Hicks, Aegis' CFO, and IPG's Bell expressed a more sanguine view. And Sorrell did have warnings about 2006.

Sorrell said he expects 15 percent earnings growth for WPP in 2004, but chief executive Sir Martin Sorrell warned growth could slow in late 2005 and 2006 due to U.S. economic conditions. "A negative factor next year will be what's happening in America, whether the economy will be under control," Sorrell said. Factors such as a stronger "intra-dependency between Asia Pacific countries could outweigh the impact of the U.S. economy," he added, noting, "When America sneezes we all catch a cold."

He also said that WPP should generate organic revenue growth of 3 to 4 percent in 2004.

Hicks said that for the first six months of 2004, revenue was up 15 percent. "And that was amid a difficult economy, largely due to currency fluctuations. We expect to do even better by the end of the year."

As for IPG, operating margins should be "at peer level," Bell said. "It should be up around 10 to 15 percent."