Jack Klues hasn’t been to Oahu, but he’s been just

Jack Klues hasn’t been to Oahu, but he’s been just about everywhere else.

A recent weekend trip took the Starcom MediaVest Group CEO to Detroit, Milan, Italy, New York, then back home to Chicago. It was exhausting, but not out of the ordinary. Klues logged 150,000 air miles in 2000—not even taking a break for the holidays.

Now, at the urging of his wife, he’s preparing for a vacation in Hawaii. “To take time off just as the new year kicks in is killing me,” he admits.

Klues and the rest of SMG’s 3,000 employees deserve a break. In fact, the competition probably wouldn’t mind if it were the permanent kind.

The Bcom3 company’s two media agency brands, Starcom and MediaVest, enjoyed roughing up its rivals in 2000. Perhaps its brightest moment was emerging victorious in General Motors’ $2.9 billion media planning consolidation last summer—the largest media consolidation review in history. Personnel from both media agency brands participated (not for the first time, but for the biggest prize yet), and SMG was subsequently called on to create a separate company, GM Planworks, in less than six months. Another key victory came at year’s end, with Media Vest picking up Kraft’s consolidated $800 million media account.

It was an admirable display from a company that didn’t even exist until last spring, when the media holding company within a holding company was formed to oversee Starcom and MediaVest. The two huge media shops, which share Procter & Gamble and other blue-chip clients, began merger discussions two years ago (when MediaVest was known as Tele Vest), but conflicts and various organizational differences stalled the talks. They finally came together in 1999, when The Leo Group and The MacManus Group merged. The conflict issues were solved when both agencies were allowed to remain autonomous under the SMG umbrella. And the organizational differences diminished as both evolved into full-service media specialists.

Throughout 2000, SMG and its two brands spent their time beating up on almost every competitor they faced in media-only reviews. Starcom won all seven reviews it entered. MediaVest participated in just a single media-only pitch, but it was a big one: Kraft. SMG batted one for two, winning GM and losing ExxonMobil to Zenith Media. In addition, SMG hardly lost any business. Media Vest’s only significant loss was J.C. Penney’s $120 million in broadcast billings. Starcom fared even better, with the $20 million Motorola semiconductor business the only notable departure.

Starcom added more than $500 million in new business, including Polaroid, the U.S. Army, Lego, Showtime, the Guinness Book of World Records, Rand McNally and FHP. MediaVest’s wins last year—including DirecTV, Capital One, Worldtraveldirect.com, Toysrus.com, Computer Science Corp. and Kraft—totaled about $1 billion.

Overall, it was a performance dominating enough to make SMG Adweek’s first Media Agency of the Year.

In addition to their size, the GM and Kraft wins were particularly sweet, as they came at the expense of SMG’s largest rivals. The Interpublic Group, which handles GM’s buying, also competed for the planning business. And in winning Kraft, MediaVest prevailed over its former leader, Irwin Gotlieb, who left in 1999 to run WPP’s MindShare unit.

Much of SMG’s dominance can be attributed to how well it managed to avoid the transition turbulence, positioning problems and internecine warfare with sister creative shops that plagued its peers. The formation of Omnicom’s OMD, for instance, was hampered by BBDO and DDB’s insistence that they retain media planning. Initiative Media, meanwhile, does not work with Interpublic sister McCann-Erickson, which has its own media network, Universal McCann. (At the beginning of the giant Unilever consolidation review, McCann’s John Dooner and Ogilvy & Mather’s Shelly Lazarus even co-signed a letter urging the client not to consolidate planning with buying.)

SMG’s emphasis on substance, though, impressed new clients and kept the current ones on board. “Much of what is now Bcom3 has always valued media, and they put their money where their corporate mouth was,” says Klues. “They saw that if we were given sufficient authority to lead, we would return back on that investment.”

When Bcom3 founded SMG, the mantra was, “Separate to integrate,” says Klues. “It was not to see how fast we could go out and win media-only assignments. It was all about making sure we could deliver the best possible media service” for sister shops Leo Burnett, D’Arcy Masius Benton & Bowles and Bartle Bogle Hegarty in London.

“Somehow, SMG is the most professional and buttoned-up and yet manages to be interesting [in reviews],” says a rival. “They seem to have really mastered how to be an independent media agency.”

Starcom and MediaVest, now led by veterans Renetta McCann and Donna Salvatore, respectively, also tend to click because they knew each other so well at the beginning—and respected each other’s fighting skills. In 1997, for instance, both competed for P&G’s $400 million print account. Starcom won. Months later, MediaVest prevailed for the packaged- goods giant’s $1.2 billion TV business. “We knew each other very well on multiple levels,” says McCann. “We were so competitive because our approaches to business were so similar.”

“After our merger, when we sat down across from each other, it was almost like looking into a mirror,” adds Salvatore.

McCann’s favorite word when describing SMG is “powerful.” Adds Salvatore: “We have clients that have relationships with the top media agencies, so we’re competitive every day. If you don’t have that in your personality, you shouldn’t be in this business.”

Klues’ fighting spirit will take him to Pearl Harbor while he’s in Hawaii. And, he notes with a hint of glee, “I’m bringing my laptop.”