Media AOY: Mediaedge:cia

In March 2005, worldwide CEO Charles Courtier and his team at Mediaedge:cia were jubilant after winning what would turn out to be their biggest new business gain of the year: the lion’s share of media planning and buying for Cingular. With spending around $800 million and revenue close to $45 million there was reason to celebrate, but Courtier and company soon had a problem.

Cingular, then a joint venture of AT&T and BellSouth, was less than thrilled with its newly minted agency’s digital offering, so much so that within weeks of handing MEC its account, the client launched a digital media review.

“That was a big wake-up call for the agency,” recalls the British-born Courtier, who has run the agency since its inception. “It was a real slap in the face, and we probably needed it. We knew we had to get that piece right because ultimately everything is becoming digital. So we went back to the drawing board.”

The 6-year-old WPP Group agency was suffering from a strategically weak digital offering that “fell short on the tools and technology side” and wasn’t “joined up enough” with MEC’s other capabilities, confesses Courtier.

Fast-forward to late October 2007. North American CEO Lee Doyle and several top executives are gathered around a conference room speakerphone waiting to start a meeting with AT&T. A lot had happened since MEC’s 2005 win: AT&T acquired Cingular, rebranded the entity as AT&T Wireless in January 2007 — the wireless division had remained with MEC — and put the entire $2.3 billion AT&T account in review in August 2007.

The voice on the phone was that of Wendy Clark, svp of advertising at AT&T. “I really just set up this call to let you know you won the business,” Doyle recalls her saying. The news, he says, rendered him speechless, but one member of the team managed to blurt out a “Thank you.”

The shop declined to discuss revenue figures, but sources say MEC tripled the revenue on its AT&T business to about $155 million, making the account MEC’s largest by far. As an incumbent, the win validated the work MEC had been doing for the client’s wireless business. “One of the most extraordinary things about our success in 2007 was that nearly all of it came from clients that we were already working with in some capacity,” Doyle says. “It was a testament to our work and client satisfaction with it.”

The win was also a coup for the shop’s two new senior managers: CEO Doyle, who had run various parts of the AT&T business since 2000, and chairman Rino Scanzoni, who moved up from chief investment officer, a post he continues to hold at parent GroupM. Both executives had assumed their new roles in May 2007.

The AT&T review also demonstrated just how far the agency’s digital practice had advanced from 2005, when Cingular rejected it in favor of Digitas (which, ironically, lost out to MEC in the consolidation review).

Commenting on the review, AT&T’s Clark says MEC’s digital assets are “unmatched and they have the talent and people in place to leverage those assets. They’re unquestionably the leader, at least that was the unanimous thinking from our end.”

In 2007, MEC raked in an industry-leading $4 billion-plus in net new business worldwide, split roughly between the U.S. and the rest of the world. The shop’s revenue was up 20 percent in the U.S. and 19 percent worldwide to $366 million and $672 million respectively.

The AT&T coup was one of many success stories for MEC in 2007. And, as it did in 2006, when MEC won Adweek Global Media Agency of the Year honors, last year it excelled at winning more business from existing clients in consolidation reviews: In the U.S., MEC had about one-third of the AT&T account before the consolidation review in August and then won the whole shebang in October. It also had the $40 million Energizer business in Europe and the Asia-Pacific region, and landed the entire $130 million account globally in February.

For Monster.com, the job search site, MEC held the $50 million account in Europe, and after a series of presentations to the client, was awarded the rest of the $140 million global account in August. In the case of Macy’s, the client asked MEC to make a series of presentations without asking the incumbent, Publicis Groupe’s Starcom, to defend, and then handed off the entire $500 million account to MEC in January 2007.

According to Recma, the Paris-based media agency performance tracker, MEC was the most competitive media agency anywhere in 2007. “The agency clearly deserves the highest grade” in the U.S., Recma said of MEC. And globally, the agency tracker added, MEC has consistently been the most competitive media agency performer over the past four years.

But it’s not just the sheer amount of business MEC reeled in during 2007 that’s impressive, it’s also how they reeled it in. Converting existing accounts into bigger business is the smarter, more profitable way to win business. Moreover, it’s a true testament to client satisfaction.

For its impressive revenue growth, transforming its digital offering into what clients describe as best in class, expanding key diversified offerings and for taking a leadership position on the critical issue of commercial ratings, Mediaedge:cia has been named Adweek‘s 2007 U.S. and Global Media Agency of the Year.

Typically, Adweek selects separate U.S. and Global Media Agencies of the Year, but for 2007 both titles are being awarded to a single agency.

In the U.S., MEC in 2007 also had a major impact on one of the most critical issues facing the industry today: The agency stalwartly supported the switch to a commercial ratings-based currency that factors in three days of DVR viewing (known as “C3”), a platform that TV audiences are increasingly attracted to and one that will influence viewing patterns for years to come. It was Scanzoni who struck the first major C3 deal of the 2007 upfront market, an $800 million agreement with NBC Universal. As other deals followed, C3 became the new de facto currency for buying national TV ads, the first new currency in 20 years.

In terms of client business up for grabs, AT&T was one of the year’s big prizes. According to Doyle, after the client announced plans to buy BellSouth for $67 billion in March 2006, MEC began preparing for a review. “It was inevitable that they were going to consolidate [media agency duties],” Doyle says. “It was just a matter of time.”

The agency adopted a two-pronged strategy to pitch the consolidated account. Though MEC knew it had to make changes in its digital operation, it felt confident that Cingular/AT&T Wireless had been extremely satisfied with the level of its service. Therefore, it believed it could put together a winning presentation by showing the other parts of AT&T what it could do for them by demonstrating what it had already done for the wireless business. After the review was announced, Doyle asked a top AT&T executive for pitch pointers. “What he said was, ‘You know that play you ran two years ago [referring to the Cingular Wireless win]? Run it again. That was a good one,'” Doyle says.

That’s essentially what the shop did. “For Cingular, one of the biggest things was the analytics and the level of accountability,” says Doyle. We were one of the first agencies to build an econometric modeling capability,” to help predict which media to buy and how much weight to give it. “One of the big strategic decisions we made early on was to showcase the work we did for Cingular/AT&T Wireless as an example of what we could do for the rest of the company.”

AT&T’s Clark believes it was a smart way to go. “They had firsthand experience,” she says of MEC’s previous work on the company’s wireless account. “These weren’t promises made in a review, they were measured results in one of our businesses. That was meaningful and you can’t overstate the importance of that to an advertiser.”

In addition to measured results, Clark says MEC impresses because “they are constantly looking ahead. And they’re far out in front of the headlights, constantly positioning the agency and therefore their clients to be successful in an ever-changing media marketplace. You saw that on the C3 negotiations. They really took the lead on that.”

MEC’s Scanzoni says the switch to the C3 ratings was critical to both advertisers and networks. (Critical to advertisers because they no longer are willing to pay for TV spots without having reasonable estimates on the number of viewers exposed to their commercials, and critical to networks because over time more viewers will watch — or at least have some exposure to — commercials via their DVRs.) “We had to find a way to credit the DVR viewing, otherwise, over time, as DVR viewing increases, it would not be a sustainable business,” Scanzoni says.

And though there is much industry debate as to whether C3 ratings provide a sufficiently detailed handle on the viewing of specific ads, Scanzoni believes they offer the best picture the industry is likely to get within the parameters of Nielsen’s current measurement system. More granular measures, such as second-by-second ratings that can be generated from TiVo devices and set-top boxes, he says, just aren’t ready for use as an industry-wide currency.

That said, such data is clearly useful in gaining insights into changing media consumption patterns, says Scanzoni. Some day a more granular data may evolve as a trading currency. But that would depend on the ability of ratings systems to develop larger household panels that could generate stable and accurate measurements using the more granular data. “We’ll cross that bridge when we come to it,” he says.

On the digital front, MEC built up its practice so that the agency could confidently offer fully integrated solutions. AT&T wasn’t the only client last year to affirm that MEC’s digital offering has come a long way since 2005. Monster.com gave it a ringing endorsement when it consolidated its global account with the agency. The North American online piece had been handled in-house at Monster, while Deutsch Media had handled offline planning and buying. “Monster was strategically very important for us,” says Doyle. “That’s a digital business and a highly transactional business, and for them to have the confidence to put an in-house digital operation in our hands is a testament to how far we’ve come in the digital space.”

According to Joan Blackwood, Monster’s North American CMO, MEC’s digital assets are first rate but just as important is the way they’re integrated throughout the core offering. “Our criteria were twofold,” says Blackwood, of her search for a media shop. “We needed someone with a global footprint and expertise in all forms of media with an ability to integrate all forms of media.”

While Monster provides an online service, “we need to speak to our customers throughout the day and not just in front of the computer,” Blackwood adds. Thus, 70 percent of the client’s marketing budget is measured media, split about evenly between offline and digital. The remaining 30 percent is split between customer relationship marketing and marketing communications.

For Blackwood, MEC was not an unfamiliar partner. She worked with MEC previously when she was svp, worldwide marketing at Computer Associates. “They come to the table and want to fundamentally know your business. They want to know what makes your cash register ring so the conversation doesn’t start with the marketing,” she says. “It’s much higher in the planning process. They’re a very engaged partner.”

MEC’s Courtier credits Alan Schanzer, North America managing director of MEC Interaction, with much of the credit for improving the region’s digital capabilities over the past two years. In 2007 alone, the digital operation increased its revenues by 50 percent to $75 million. “We knew we had to take it beyond its heritage as a sort of brand agency and become much more specialized in the management of data and focused on emerging areas such as mobility and other platforms like gaming [and] interactive television,” says Schanzer. “Search also became a very integral part of our offering.”

MEC has developed a diverse group of specialist units within the digital sector, added Schanzer. At the same time those units have been integrated, with each other and with various traditional media. Integration is key to determining which combination of media assets drive a client’s objectives, he says. “So there is integration between online and offline, all the digital channels, local regions and global and even content and channels, joining everything up through a very powerful suite of analytics tools.” In effect, the integration process connects the fragments to provide a clearer look at what’s happening across the diverse media landscape.

And MEC parent WPP has helped the shop bulk up digitally over the past two years, with acquisitions of search companies including the May 2007 purchase of 24/7 Real Media for $650 million. According to Doyle, clients covet its proprietary bid management process.

Clients Blackwood and Clark confirm those additional capabilities were a definite plus in their respective reviews of MEC’s capabilities. Earlier in the year it acquired Quisma and last August it bought Catalyst, both of which specialize in paid search. All of the search assets have been housed at GroupM, WPP’s media management arm, so that the tools can also be used to benefit sister shops MindShare, Maxus and MediaCom.

Beyond search, “there is a lot of focus on convergence attribution,” Schanzer says, because clients want to know “how is television driving search or how online is driving search or how is TV driving online,” to name just a few examples. “So the integration is helping make decisions about optimizing campaigns.”

And the changes paid off. The digital sector was the fastest-growing segment for MEC across the globe, growing 50 percent in revenue to contribute $150 million, according to sources.

Diversified services are also playing a key role in the shop’s growth.

MEC Access, a newly created unit in October 2007 that combined the agency’s sports, entertainment and cause-related marketing efforts, was the second fastest-growing unit last year, up 36 percent in revenue to $55 million worldwide. It’s a key figure that demonstrates how reliant agencies are on diversified services for growth. Worldwide, revenue from all diversified services accounted for 40 percent of MEC’s revenue, or about $270 million.

Looking forward, Asia-Pacific, Russia and India will be the biggest growth markets for MEC. Last year, growth in the APAC region was particularly strong — up 50 percent to $80 million in revenue — driven by the $250 million Sony win. The Sony win was a “coming-of-age moment” for the agency in the Asia-Pacific region, Courtier says. “It was the culmination of an awful lot of hard work and the investment of a lot of money and resources.”

MEC has clearly made strides in new areas and continually tries to be out in front on new initiatives, issues and applications. But some clients are happy with the basics — albeit ones that are best in class.

“We’re looking for the best stewardship and management of our media investments,” says Mark Ingall, managing director of global strategic media at Citigroup. That client consolidated its $60 million global account with MEC in August.”There’s no use being distracted by the shiny little objects in media that account for 5 percent of the money and 95 percent of your time,” he says. “What we like about MEC is their good craft skill and modern media management.”

Estimated Billings:
Global: up 21 percent to $24 billion
U.S.: up 30 percent to $9.1 billion

Estimated Revenue:
Global: up 19 percent to $672 million
U.S.: up 20 percent to $366 million

Accounts Won/Media budget:
AT&T (U.S., $2.3 billion), Macy’s ( U.S., $500 million),
Paramount Home Entertainment (global, $250 million), Sony (Asia-Pacific, $250 million), Monster.com (global, $140 million), Energizer/Schick (U.S., $130 million)

Accounts Lost/Media Budget:
Barilla ($140 million )
United Airlines ($100 million)

Highlights:
Won AT&T, one of the biggest consolidated account reviews of 2007
A key industry leader in the switch to commercial ratings