Publicis’ SMG Absorbs D’Arcy Directory Unit

When Starcom MediaVest Group executives pitched Gateway’s $150 million media business earlier this month, they offered the client something new from the Publicis Groupe division: a directory-advertising unit.

In the wake of D’Arcy’s demise, the $18 billion global media holding company, which includes Starcom and MediaVest, has absorbed the estimated $100 million D’Arcy Directory Marketing operation and rebranded it with the SMG name. The unit, which will plan and buy directory advertising for clients, will continue to be led by former D’Arcy managing director Kathleen DeCaire-Aden, who will be CEO and managing partner of SMG Directory Marketing. The unit will continue to have offices in Chicago, Detroit and San Diego.

“We are about identifying the most powerful contacts to engage consumers,” said Nick Brien, president of SMG’s Diversified Services division. “[Directory advertising] is another highly powerful contact.”

Directory advertising—still used mostly in yellow-pages phone books—may not be the sexiest category, but it is a big one, with nearly $15 billion in annual revenue, according to the Yellow Pages Integrated Marketing Association. That is $2 billion more than what advertisers spent on local TV in 2002, according to Bob Coen, Universal McCann svp/director of forecasting, who estimated yellow-pages advertising alone at about $12 billion last year.

SMG is playing a game of catch-up in the category. Omnicom Group has Ketchum Directory Advertising, and Interpublic Group has Waldstrom Group.

SMG claims its directory unit will work more closely with more traditional planning and buying operations than is usually the case, Brien said, including its interactive unit. Most directory divisions are autonomous of general planning and buying. “They have [directory advertising] as stand-alone revenue profit centers,” Brien said. “We wanted it as part of SMG; it strengthens our value proposition.”

But Gene Daly, president of Ketchum Directory Advertising, said his agency has not been hurt by its stand-alone status within Omnicom. “If you buy the fact that common brand means integration, I’ve got a bridge for you,” he said. “The acquisition is easy—the integration is hard.”

The mostly mature industry is only projected to grow about 3 percent this year, according to YPIMA. “It tends to be a fixed universe of companies that spend money in yellow pages,” said Charles Laughlin, vp at Princeton, N.J.-based directory-marketing consultancy Kelsey Group. “If a company isn’t already spending money in yellow pages, you have to convince them to do so.”

SMG is betting on growth from the still-nascent electronic side of directory marketing—particularly when it comes to advertising through keyword searches—to change that.

While Internet directories account for less than 3 percent of that total revenue, Laughlin added that online does make up approximately 12 percent of total directory references.

“It’s slowly transitioning into a digital and online medium,” added Rishad Tobaccowala, president of SMG IP, the network’s interactive division.

SMG sees leverage opportunities in the area. In addition to luring new clients like Gateway—which DeCaire-Aden called the “first and rather quick example” of how the shop hopes to use directory buying expertise to enhance SMG pitches—the unit will look down the line to convince some of SMG’s more traditional clients who have not used the medium, such as Procter & Gamble, to do so.

“There’s growth in bringing existing clients onto our roster,” DeCaire-Aden said. “It’s a whole opportunity that’s never been tapped by anyone.”