• by Joe Mandese , January 19, 2016

Agency of the Year profiles don’t normally begin with a disclaimer, but MediaPost’s awards aren’t like those of other trade publications, so this profile begins by addressing the multibillion dollar elephant in the room — the agency’s loss of a Procter & Gamble’s nearly $3 billion U.S. media services account.

The loss, which came just two weeks after MediaPost named SMG Agency of the Year for 2015, capped off an unprecedented summer of media agency account reviews that has been dubbed “pitchapalooza,” of which SMG won its fair share. Nonetheless, recognizing SMG as the best of the best after losing much of P&G, an account the agency has handled for more than two decades, likely raised some eyebrows among people who don’t understand the criteria for our awards. So let’s clear that up first.

MediaPost’s Agency of the Year awards are not report cards on new business wins, account pitches of net billings gains or losses. There are many reasons that go into why an agency wins or loses an account, including personal relationships, compensation, and the role of procurement departments that we feel have little direct bearing on the criteria these awards celebrate: vision, innovation and industry leadership. And with all due respect to P&G, the editors of MediaPost think any client would be hard-pressed to find an agency group that hit those marks better than SMG in the past year or so. So enough about P&G.

The real story in SMG’s win, is why it has been so long since MediaPost recognized it as Agency of the Year. Since the creation of these awards, some variant of SMG — Starcom, Mediavest, SMG and Spark — have won numerous times — including consecutive top honor wins when we created these awards in 2004 and a couple more in between.

The real story isn’t that SMG won in 2015, it’s why it didn’t take top honors over the previous eight years. The simple answer is that other shops simply did a better job of nailing our main criteria during those years, but a more honest answer is that SMG simply set such a high bar for itself early on, that it was difficult to surpass — until now.

The group’s reengineering toward a “precision media” strategy under CEO Laura Desmond has truly transformed the art and science of the modern media services organization, combining data, technology, strategy and human ingenuity — and yes, creativity too — into a blueprint for others to follow. If there ever was a time when agencies and their clients needed to focus on the precision of media — targeting, delivery and measurement — it has been the past several years in which the consumer marketplace has hyper-fragmented not just into an infinite array of media channels, but media and device platforms, as well.

Like other shops, the core of SMG’s precision strategy focuses on developing a more precise understanding of consumer targeting. How it chose to do that definitely leads the industry. 

It began three years ago when SMG became the charter agency working with Acxiom to develop its so-called Audience Operating System, a massive database of some 800 million unique consumer identities pooled from disparate sources and an array of marketers Acxiom does business with, and which could be used to target consumers with a relative confidence across digital channels — display, mobile, email, etc. — as well as television.

Many big agencies have since adopted that system, which has since been integrated into Acxiom’s LiveRamp, but SMG reinvested in its pursuit of precision targeting by investing in a state-of-the-art data management platform, acquiring independent RUN in late 2014 and integrating with Acxiom’s data to create a new hub for targeting consumers based on the most persistent digital IDs it can gather on them.

“Our view is that the modern ID is a unique ID that is going to take the place of cookies, because people’s mobile phones, and the signals they throw off from their mobile phone usage, is the most important targeting information you can get,” explains SMG’s Desmond, adding, “It’s not just for millennials, but for all people. There are now more mobile phones in the world than there are people, and that trend is going to continue.”

By combining RUN’s proprietary unique ID dataset of about 200 million users with Acxiom’s 800 million consumer identities, Desmond says SMG now has “an addressable data scale that nobody else in the business has.”

But identifying and targeting consumers only gets you so far. You still need to reach them in media and serve them the right content at the right time that matches their identities, need states and life stages. To do that, SMG re-deployed parent VivaKi’s trading desk, Audience On Demand, and embedded its programmatic audience-buying experts directly into its planning and buying account teams to service specific brands’ strategies and executions.

“Our belief is that programmatic needs to be done in sync with every other buying and investment decision,” says Desmond, who says SMG was the first agency of its size to implement that kind of seamless integration between programmatic and planning and buying teams, and that the benefits have been profound.

“When you do it in a way that is in sync and in the hands of the planners and buyers who are in charge, they can take those learnings and feed them back into the strategy decisions, the planning decisions, and the audience decisions, seamlessly, faster and in real-time.”

Desmond says these moves are just the latest in an ongoing progression to make audience targeting and media-buying more precise, and that they are beginning to impact the way the agency buys TV too. Following its support of some of the first scaled addressable TV advertising tests with cable and satellite TV operators, she says, the promise of programmatic TV-buying is now a reality, and the agency is beginning to apply its precision media strategies and “modern IDs” to implement it.

To do that, she says, also requires more “dynamic” content than conventional TV advertising or even conventional branded entertainment, so the agency has also merged social and “millennial marketing” agency MRY into SMG and acquired “real-time content” company Relevant 24.

“Every one of our plans and buys now has large elements of it that are addressable, so they also need addressable content,” she explains, adding, “We acquired Relevant 24 — which creates adaptive content done every 24 hours — so we could map content solutions in a dynamic form to audiences.”

That’s the infrastructure SMG built to create the modern day precision media services agency, but the real reason for SMG’s win was how it has been executed within its operating unit, especially Starcom, as illustrated by two very different kinds of account teams: Kraft Heinz and Starcom’s so-called “New Establishment” brands team.

When Kraft and Heinz announced their merger, it set off what should have been an obligatory account review, but the Starcom team managed to circumvent the disruption by moving fast on a solution solidifying the agency’s relationship.

The solution was to develop a comprehensive DMP, or data management platform, strategy for the massive food marketing company. The strategy didn’t create one single platform, but an array of DMP tactics and executions — about 100 of them — to learn how the marketer could begin to leverage data about its consumers to target them more efficiently and effectively in media.

The strategy, which was developed by the group’s Executive Vice President and Managing Director Danielle Gonzales, is believed to be the first of its kind, and utilizes an iterative approach to data-based targeting that could be a model for other big consumer packaged goods marketers. 

The system begins by identifying data — both first- and third-party — that can be associated with Kraft’s customers and then integrating it into its programmatic strategies. In one such execution, the Starcom team strategically tagged all of Kraft’s assets to enrich its first party data, and managing over 70 campaigns in a first-time self-service model. Other initiatives include matching Kraft’s customers to TV targets via Nielsen Catalina Solutions and using it to buy addressable TV audiences, as well as the first-ever “DMP-targeted print campaign.”

“We used data to understand that Philly Cream Cheese lovers are either ‘sweet’ or ‘savory’ and then used that data to find those people and serve them the right sweet or savory that represented their preference,” notes Starcom CEO Lisa Donohue, adding, that it illustrates, “a simple but powerful” way of leveraging data to not just improve the targeting of consumers, but the way they experience a brand.

“Often people think of ‘experiences’ as being ‘big ticket’ items,” she says, adding, “when the reality is we need to focus on how the consumer experiences brands every day and in every way.”

The team’s approach to leveraging programmatic media-buying via data has become the role model for the rest of SMG and it has even created a series of workshops — DataNextNow — to train its entire 1,200-person organization, and ultimately the rest of its SMG family in best practices for applying it.

But perhaps the most innovative uses of media within SMG during the past year took place within its New Establishment Brands team, a group pitching, winning and representing account seen as transforming the entire world of marketing, including Twitter, Airbnb and Houzz.

That those brands have turned to such a traditional agency as Starcom — whose Midwestern roots are grounded in its Leo Burnett legacy — is telling, but it also says a lot about how both the agency and those brands are changing the way they think about media.

“It’s not just about sharing a message today,” explains Donohue. “It’s about helping brands find their truth with consumers, one that resonates with their brand values. We’re marrying the best of traditional brand building with the speed and agility of new establishment brands.”

Perhaps the best example of that philosophy is the way Starcom has been servicing Airbnb, a brand that to date has relied largely on the word-of-mouth marketing its own platform generates, but is beginning to leverage mass media to extend it to new markets.

“We needed to connect them to a conversation. A moment,” Donohue explains, citing Starcom’s strategy to lean into a truly transformational human experience taking place in the media.

“When it was announced that Caitlyn Jenner was receiving the Arthur Ashe Courage Award, we recognized an opportunity for Airbnb to stand up within the tension,” she recalls. “This moment fit perfectly with Airbnb’s messaging of ‘Belong Anywhere’ — there was an emotional fit.”

Airbnb went with Starcom’s recommendation to tie its brand message of “belonging” to explicitly reference transgenders and “infiltrate the national dialogue at the right moment, in the right context with the right content.

“Airbnb’s public support of the transgender community proved their love for human diversity, changed brand perceptions and cemented a meaningful connection between the brand and their target,” Donohue explains.

Within hours of launching that campaign, Airbnb’s sentiment changed from “negative to 90% positive” and it has tapped into a new marketplace of transgender consumers in a way most mass consumer brands haven’t yet figured out how to tap.