SMG, Donovan Reach Settlement

NEW YORK Starcom MediaVest Group and Donovan Data Systems today said they have reached an agreement to end their arbitration process that began in July 2007 and withdraw all claims currently pending between the two companies.

The dispute and arbitration arose over a decision by SMG to leave Donovan, the system it had relied on to process most of the $20 billion-plus in ad buys it conducted on behalf of clients in favor of Chicago-based Mediabank. (Buys for SMG’s GM agency Planworks, however, are still processed by Donovan under a contract that runs to 2010.)

Relative newcomer Mediabank has tried to challenge Donovan for dominance in the transactional processing marketplace. So far, among the big media agency networks, only SMG has opted to work with them in a major way. A couple of months ago Interpublic’s Mediabrands, which oversees Initiative and Universal McCann, with combined billings of nearly $20 billion, opted to renew with Donovan. Sources said most of the other big shops remain under multiyear contracts with Donovan.

When SMG opted to switch vendors, Donovan accused SMG of providing technology that was patented by Donovan to Mediabank to help it process SMG’s transactions. SMG filed counterclaims.

SMG and DDS said they would continue to work together under multi-year agreements in the U.K. and Canada. The agreement reached between the two companies also provides for SMG in the U.S. to continue the use of the DDS system for electronic commerce in the spot TV marketplace (DARE) through 2011.
“We are pleased to have reached a mutual agreement to end the arbitration and move forward,” said SMG worldwide CEO Laura Desmond.  
“SMG, Zenith Optimedia and Saatchi are important global clients and we share a long, continuing partnership with all of them,” said Donovan.

Terms of the settlement weren’t disclosed.