One of Madison Avenue’s most influential agencies is about to be put through a major restructuring – just weeks before it is expected to help advertisers like American Honda, Taco Bell and Samsung Electronics figure out how much money to invest in TV commercials and other types of advertising.
The average person doesn’t hear much about Starcom Mediavest Group, but the large media-buying agency is responsible for the allocation of millions of advertising dollars to media outlets like CBS, the New York Times and BuzzFeed each year. Owned by Publicis Groupe of France, SMG, as it is known in the alphabet-soup nomenclature of the advertising industry, is a key partner to may of the nation’s biggest media outlets. Starcom Mediavest was instrumental in enlisting Procter & Gamble to help launch TV’s CW network in 2006 and played a major role in having Ellen DeGeneres wave a Samsung smartphone in front of millions of viewers during the 2014 Oscars telecast.
Now Starcom Mediavest is about to be reshaped, according to four people familiar with the situation, in a move that could affect the plans of dozens of big-spending advertisers and the ways they choose to invest in TV, print, digital venues and social-media outlets. About 80 U.S. staffers, representing 3% to 4% of the company’s U.S. workforce, are being laid off, one of these people said. “We routinely evaluate all of our businesses to map to our client needs and the future,” the company said in a statement. “As a result, we are making talent calibrations across our U.S. operations.” Further changes in the company are expected to be announced within weeks, according to these people.
The shuffling takes place just as most advertisers begin to gear up for a series of important upfront presentations, during which the nation’s TV networks try to sell the bulk of their ad inventory for the coming season, as well as a series of “newfronts,” in which digital-media giants try to do the same.
Executives from Starcom MediaVest, which employs more than 8,000 people around the world and includes ad-buying operations such as Mediavest, Starcom and Spark SMG, were not made available for comment.
The restructuring occurs after the company’s parent, Publicis, reworked its top ranks. Laura Desmond, who has led SMG as its chief executive since 2008, was made chief revenue officer of the parent company earlier this year. Steve King, who has run sister media-buying agency Zenith Optimedia, was placed in charge of all of Publicis Groupe media operations. The coming overhaul would appear to be his attempt to put a new imprint on the unit.
Under Desmond, Starcom Mediavest has placed emphasis on ties with new-media outlets in recent years. In 2014, SMG built a deal with Facebook giving Publicis Groupe clients access to data from the social-networking giant as well as help developing pitches for Instagram. In 2013, Mediavest unveiled a deal with Google in which it committed to spend tens of millions of dollars on YouTube ads as well as advertising in other parts of the company’s digital empire.
In recent months, however, there has been a growing sense on Madison Avenue that digital advertising doesn’t always move the needle on sales. The precision advertisers get with commercials delivered via the Web and mobile devices is welcome and allows big marketers to aim more finely at consumer bases, but some form of TV advertising remains necessary to move mass quantities of product. In 2016, there is a growing sense on Wall Street and among media companies that the coming TV upfront market could be healthier than it has been in several years, with advertisers committing more money to TV in advance than has been typical.
SMG has lost several important accounts over the last several months. The company’s Mediavest unit once counted Procter & Gamble, Coca-Cola and Walmart among its top clients, but has lost most of the business from those accounts. Walmart fired the agency earlier in February. The December departure of Procter, one of the world’s biggest ad spenders, came as a particular blow. Procter moved the bulk of its business to Omnicom Group’s Omnicom Media Group and Dentsu Aegis Network’s Carat after 15 years as an SMG client. Coca-Cola, a client for more than a decade, moved a large part of its media-buying business to Interpublic Group’s Universal McCann in July.
One bright spot has been Spark, a smaller unit that in recent months has won accounts from Taco Bell and Valspar Paint. Spark recently helped place an ad from LinkedIn into Sunday night’s ABC’s pricey Oscars telecast.
Executives at media companies that do business with Starcom Mediavest are speculating about whether Brian Terkelsen, CEO of Mediavest, and Lisa Donohue, CEO of Starcom, will continue in their current roles or take on different responsibilities. They wonder if Chris Boothe, CEO of Spark, will gain greater authority, along with John Muszynski, Spark’s chief investment officer. And there are questions surfacing over how other SMG executives and senior buyers might be placed.
SMG’s power in the media world has been evident for decades. Some of its former top executives now play important roles at Time Warner’s Turner, Comcast’s NBCUniversal and IAC’s Electus production studio. Pam Zucker, a sister of Jeff Zucker, the president of CNN and former CEO of NBCUniversal, has long been a senior executive at Mediavest. While advertisers these days are clamoring for new sets of data other than Nielsen’s to measure audiences for video content, Starcom pushed companies like Weather Channel and Discovery Communications to try similar experiments over the last decade.
The company’s influence is a testament to what is a relatively new dominance in the advertising industries by the agencies that place the ads, rather than the ones that create them. In an earlier era – the one illustrated by the AMC drama “Mad Men” and its protagonist, Don Draper — media buyers were considered wonky researchers who had to defer to creatives who devised clever slogans and jingles.
No longer. As marketers face a dizzying array of new types of media, whether cable network or social-media outlet, analyzing those environments and riding herd over the cost of advertising in them has become paramount. SMG has its roots in its Mediavest unit, which grew out of a company launched in 1993 called Televest – the first media-buying unit to become “unbundled” from a creative agency, the now defunct D’Arcy Masius Benton and Bowles. What SMG will look like in the months ahead is being sketched out by Publicis Groupe executives.