Updated: New SMG Exchange Unit to Harness Data, Let Clients ‘Opt In’

Starcom MediaVest Group, the Publicis-owned media-agency network, is realigning its approach to the advertising marketplace with the creation of a new entity called the SMG Exchange (SMGX). The exchange, a new ad-buying unit that will serve clients at all three SMG media shops, will be managed by John Muszynski, who has been elevated to the newly created post of chief investment officer for SMG and who is tasked with building the new operation from scratch.

The idea behind the new operation is to maximize the leverage of the estimated $22 billion in buying clout brought to the marketplace each year by Chicago-based shops Starcom, Spark and New York-based MediaVest. SMG executives hope to enhance that leverage by combining the sheer scale of the buying volume with more precise applications of data  and marketplace intelligence.

The new operation will focus first on local media, including TV and radio, out-of-home and newspaper, as well as kid’s and sports, including events, sponsorships, licensing and merchandising opportunities, totaling as much as $7 billion in spending.

National broadcast will be phased in by 2010. The buying chiefs at the separate shops, including Donna Speciale, MediaVest’s president of investment and activation, and Chris Boothe, Starcom’s president of activation, continue to report to the CEOs of their separate agencies while having a functional dotted line reporting responsibility to Muszynski.

Muszynski will continue to report to Laura Desmond, worldwide CEO at SMG. Desmond, who said the project has been in the works for six months, noted, “When we first sat down to talk about this, we did not believe anything was broken and it wasn’t about addressing a concern or a gap or a need. The question was how do we ensure we are leaders of the next marketplace. It’s an attempt to leapfrog to where we think things are going.”

The big dollars are just one piece of the equation, said Desmond. “What is equally important is the fusing of data and market intelligence and advance technology with scale. Those three things work hand in hand.”

Muszynski has a busy schedule ahead of him in the next several months as he both staffs up the new platform while doing client-by-client assessments of just how much of their budgets they should be contributing to the new entity.

For clients, the SMGX model is “opt-in,” meaning they can choose between it or keeping their dollars at the specific shops where their budgets are currently parked. Part of Muszynski’s task is to maximize those client commitments.

Desmond said that SMG has been discussing the new approach with clients and “they are very encouraging of the model.” She also described the model as “open source,” meaning clients can choose between SMGX or their individual shops and shift budgets between the two as different opportunities arise. “We want to build a scaled operation that has the agility of a very fast, agile automobile that can accelerate quickly,” she said.

Given all the change that’s occurred in media in the past several years, said Muszynski, “you really need to look at the way we operate in the marketplace differently than the old traditional way.”

Technological advances have flooded the market with oceans of data that weren’t available five years ago, he said: “We’re not using that data properly to adjust the way we approach the marketplace and the decisions we make.” In part, SMGX is designed to change that.
“That’s probably the number one thing that excites me about this,” he added. “How do we harness all the data available to us in the 21st century?”

SMGX will also analyze how clients can best take advantage of addressable TV, other advanced TV platforms and platforms such as auction exchanges.