How Carat Plans To Unify Its Diverse Operations

Aegis Group’s Carat Americas operation has come a long way in a short time, reaching almost $6 billion in billings in 2004, just six years after setting up shop. But the eighth-ranked media agency network, according to RECMA, still lags considerably behind the top players.

That said, Carat Americas CEO David Verklin and its recently named Media Group president Ray Warren are forging plans to narrow the gap—including expanding its diverse array of products and services even further over the next 12 months and persuading the different strategic business units within Carat, which operate with separate P&Ls, to better work together to improve client satisfaction and drive new business.

And it’s not just media. One recently launched service is a Web site design and consulting practice—something that few if any other media agencies offer, said Verklin. Plus, separate mobile/wireless and game marketing units are soon to roll out, and Vizeum, Carat’s European media planning specialist, will be introduced to North America.

Warren, who joined Carat in July, says he will lobby his colleagues who run the other units, which include interactive services, marketing analytics and diversified services, to work in a more unified, coordinated fashion. “The only problem/opportunity I see at the moment is about getting all the Carat assets moving in the same place,” says Warren. “If there is any kind of theme running throughout the discussions with clients, it’s [complaints like], ‘You have all these great assets, so why can’t it be easier to work with them all?'”

The answer, an insider says, has a lot to do with how fees are divvied up among the different units when they do work together. Warren, 51, runs the biggest business unit, media, which accounts for about 70 percent of Carat Americas’ annual billings. And Verklin acknowledges that the four main lines of business, which all report to him, may need to collaborate more in order to keep the agency growing and clients satisfied.

“Charlie built the battle ship so to speak,” says Verklin, referring to Charlie Rutman, Warren’s predecessor who left earlier this year to become CEO North American Operations for Media Planning Group, a unit of Havas. “Now the challenge is to sail it faster, better and quicker.”

Warren’s job covers more turf; he oversees Canada and Latin America, whereas Rutman’s position covered just the U.S. When he started in July, he hit the ground running, meeting with clients, even attending their staff meetings to get a feel for their business needs. “It’s total immersion,” he says, adding that he expects it to remain that way for at least his first year. Clients include Procter & Gamble, RadioShack, Motorola, CBS, Pfizer and others. Recent new business wins include Rent-a-Center ($26 million) and Revlon ($125 million). Losses include Bally Fitness ($80 million).

Once he’s thoroughly familiar with the client base, Warren says he’ll focus more on managing the media group’s growth and coordinating with the other units. “Taking Carat to the next level is not about media planning and buying,” he says. “It’s about everything Carat Americas has to offer, to provide clients with a holistic media offering.”

Warren’s view of his role reflects a key difference between himself and Rutman. Working closely with clients on strategic planning was one of Rutman’s sharpest skills. “It was absolutely critical in the early years to have someone with Charlie’s skills because that was our niche—media and planning and proprietary research,” said an insider. “Now the rest of the industry has caught up.”

In effect, the source said, future growth will require different management skills. And Verklin, who is spread thinner with his recently gained role of managing Asian operations, needs a strong manager for the media group. Asked what one skill of Warren’s got him the job, out of 25 candidates, Verklin replied, “His business acumen.”

At the same time, Verklin says Warren and Rutman are “cut from the same cloth” in many ways, including their hands-on, approachable and client-focused management styles. Others, who know them, agree. “I think their styles are very similar,” says a competing agency CEO who has worked with both. “They’re both collaborative, client-centric, always looking for the win-win solution. They also share a certain humility. It complements David’s style. He is the voice and face of Carat.”

Warren’s the first to admit he’s not the hard-core media planner that Rutman was. “I come more from a marketing background,” said Warren, whose resume is diverse. He came to Carat from OMD, where he was managing director with specific oversight for off-line media buying. Prior to that, he was one of four founders of Raycom Sports, a sports marketing company, where he worked (lastly as CEO) from 1988 to 2002. Prior to Raycom, he was an ad sales executive at the ABC Television Network. Earlier, he held media posts at Ted Bates, BBDO and Benton & Bowles.

Among Warren’s priorities is a reorganization that will reduce his number of direct reports and free him to deal with broader managerial issues. He’s already made one key hire: Johann Wachs joined Carat two weeks ago as head of strategy. He had been director of strategy at PsychoLogics, the New York-based strategic consultancy. The strategy post has been expanded to a full-time position. Joanne Burke, former evp, managing director of Carat Insight and the agency’s top researcher, had handled those chores. She left the agency last December. Warren says he expects to fill the research job within the next 30 days.