Agency of the Year: Carat

A year ago, it would have been a bit of a stretch to declare Carat a U.S. media-buying powerhouse. But after the year Carat has just enjoyed, there’s no denying the Eurocentric shop has become a major player. Carat grew U.S. revenue 30 percent to $125 million in 2012 YOY, according to Adweek estimates. This, as it picked up lead buying responsibilities for two of the most formidable American corporations, General Motors and Macy’s, as well as new business from staple client Procter & Gamble. Meanwhile, Carat strengthened its strategy bench with hires like Mike Vitti, svp, group director of data and analytics. It also earned industry accolades (including a gold Effie for its work on Johnnie Walker), while helping drive double-digit sales growth for brands like Nivea. “We’re at a tipping point in our American operations,” says Doug Ray, North American president, who this month was also appointed president of Carat Global. “The U.S. is very much leading in many ways some of the work that we’re doing as a global network, and I think we’ve become perhaps, or are becoming, an iconic U.S. media operation.” The agency’s performance also caught the attention of Japanese holding company Dentsu, which last July continued its aggressive push into Western markets by announcing plans to buy Carat’s London-based parent network Aegis for $5 billion. (The deal appears on track to close, pending regulatory approval in China.) “Carat’s resurgence in North America has really made them one of the fastest growing agencies in the world,” says Tim Andree, president and CEO of Dentsu Network. “That was a strong contributing factor to our rationale to pursue the acquisition of Aegis.” That boom is in no small part a result of Ray’s leadership, for which he was named one of Adweek’s Media All-Stars last November. His new global title has also given him two bosses: For North American duties, Ray reports to Nigel Morris, Aegis’ CEO for the Americas and Europe, the Middle East and Africa; for global, he reports to Nigel Sharrocks, CEO for Aegis Media Global. In January, only six months after Ray was named North American president, GM announced what would become the single biggest driver of growth for the agency’s business in 2012, choosing Carat to handle consolidated global planning and buying responsibilities. The account, previously spread across 108 shops in 50 countries, represents some $3 billion in billings globally and was the largest single contract ever awarded in advertising, according to Carat. GM—which, according to Kantar shelled out some $1.17 billion across U.S. media in the first three quarters of 2012—is now the agency’s largest client by revenue. “In the selection process, we were looking for an agency partner with the sophistication to leverage global marketing opportunities,” explains Paul Edwards, GM’s executive director of global marketing strategy. “Carat presented an innovative approach and a service model that drives significant marketing value for both our global and regional brands.” Still bearing the stigma of a government bailout and working to cut costs across the board, GM never made bones about the fact that squeezing more value out of its marketing budgets was a key factor in its decision to streamline agencies. The automaker’s total U.S. outlay on media was down 9 percent from Q1 through Q3 versus the same nine months in 2011, per Kantar. Still, the $1.78 billion GM shelled out over full-year 2011 made it the third largest spender on advertising in the U.S. that year, behind only P&G (another of Carat’s largest clients) and AT&T. In any scenario, the process of transitioning a bulk of business so large (in GM’s case, from Publicis’ Starcom) would be a feat. Carat pulled it off. “We built and hired a fully functioning Detroit office that now has over 200 people in it,” explains COO Steven Feuling, who directs the agency’s work on GM brands. “We hired the vast majority of those people in the first 60 days, which I think was pretty much a Herculean effort.” Still, the highly visible, hardball peculiarities of GM’s approach to the market over the past year suggest it was an especially challenging new client. In the days leading up to Facebook’s IPO in May, GM made headlines by pulling all paid ads from the social network, citing ineffectiveness and undermining the Wall Street debut. That same month, GM announced it would not air ads during the 2013 Super Bowl, claiming the $3.8 million price tag (up from $3.5 million in 2012) was too steep. Meanwhile, during the upfronts, the automaker sought dramatic price cuts from the networks of as much as 20 percent, even as other advertisers were negotiating single-digit increases. In July, GM ousted outspoken marketing chief Joel Ewanick, reportedly for mishandling a $559 million sponsorship deal with British soccer team Manchester United. Carat declines to comment specifically on the tumult early in the days of its relationship with GM. “The client came to [some of] those decisions well before we were in a position to influence some of the strategies,” explains Ray. “Some of those decisions happened within the first 30 days of us starting to transition the business.” (The agency began the transition in late January of last year.) “Some of those decisions were certainly based on their collective experience over time.” Naturally, Ray would rather talk about the evolution of Carat and the agency’s desire to avoid the industrywide commoditization of media-buying services. “As we look at the return on investment that different technologies and digital channels are bringing, [they] are significantly higher than some of the legacy media that’s out there,” he explains. “We have to change the way we do things and we have to change the way that clients think about media. I think that’s what we’re trying to do with GM. We’re fully aligned and in lockstep, and we are working as a well-oiled machine with GM.” Adds Edwards, “Carat has used the business model and its scale to bring value and efficiency to the business.” Even as it took on GM’s business, Carat continued to attract other new accounts. In August, it won buying duties for adventure camera brand GoPro, which spent $16 million on media in 2011, per Kantar. In October, the agency locked up another big win in the form of broadcast and online responsibilities for Macy’s. The retailer, which handles print buying in house, spent $372 million on TV, radio and digital in 2011, Kantar estimates. Carat says it is early yet to show fruit from its labor for both GM and Macy’s. But its work on Pampers, a Carat client since 2004, helped the brand last year become P&G’s first ever to cross the $10 billion mark in global revenue. Meanwhile, Carat’s work for Gillette Fusion ProGlide Styler razors helped the new product carve out an 18 percent market share, per Nielsen Answers. It’s little wonder that P&G last year recognized Carat as one of its most effective partners with an Excellence Award, the agency’s third such honor in as many years. Carat continues to translate that goodwill into still more assignments from the CPG giant. In July, P&G awarded the agency Gillette Venus, the women’s razor brand, which spent $39 million on media in 2011, per Kantar. (The business was previously handled by Starcom MediaVest Group). Carat’s work on P&G’s hit London Olympics effort, the “Thank you mom” campaign, earned it expanded responsibilities for the next round of games, the 2014 Winter Olympics in Sochi, Russia. It’s easy to wonder whether, considering such head-spinning growth, the agency’s reach has exceeded its grasp. Ray, for one, doesn’t seem concerned. Observes the executive, “We’ve transitioned so much business in the last two to three years, we’ve become almost precise from a military perspective.” Pictured at top: Steven Feuling COO, Carat; Nigel Morris CEO, Aegis Media Americas and EMEA;Doug Ray,President, Carat North America, and president, Carat Global.

Brand Marketing

Agency of the Year: Carat

Landing GM and Macy's catapults Carat into consideration as a major American media shop

Gabriel Beltrone

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Gabriel Beltrone