Bcom3 has launched Starcom MediaVest Group (SMG) to hold the Leo
and MacManus groups' media assets.
SMG now ranks among the top three media services holding groups, with
global billings of US$16.5 billion.
The media discipline is playing a more prominent role in the advertising
process amid growing complexity and fragmentation of media, according to
Mr Kevin Malloy, executive VP of SMG international and chief executive
of MediaVest North America.
While both media owners and agencies are merging horizontally to enhance
their operations, a media agency's size and clout are the keys to
competing in an increasingly consolidated landscape.
But merely having the size is insufficient; Mr Malloy said it was more
important for an agency to have resources and competitive packages.
Three to four media operations will ultimately dominate the global
advertising scene, and Mr Malloy said: "We're sure to be well at the top
of the placing."
"We have the industry's most powerful media assets in Starcom and
MediaVest, and when you factor in our alliance with Dentsu, the impact
of our combined scale puts us at the top of the global marketplace,"
said Mr Bob Brennan, SMG's chief operating officer.
Asked if SMG would ally with its majority shareholder Dentsu, Mr Malloy
said the decision would be up to Bcom3's board level decision-makers in
Japan.
"How we will operate with Dentsu is restricted to discussions in Japan,"
said Mr Malloy, who added that it was still in the early days of
negotiations.
With bundling leading to bigger media budgets, Mr Malloy nevertheless
said he didn't forecast a downward spiral in media rates, as costs are
determined by the marketplace.
In fact, media fragmentation has caused further consolidation among
media owners, as many media conglomerates now tend to sell their
subsidiary properties all at once.
Starcom and MediaVest will merge under the holding umbrella of SMG, and
the combined entities will operate under the Starcom brand.
However, Starcom and MediaVest will continue to operate independently in
North America and the UK, where SMG decided to keep both established
entities separate.
Starcom and MediaVest are two established, enormous brands in those two
markets, where they are conscious of conflicting client issues as
well.
In Brazil and Puerto Rico, the respective media operations of Leo
Burnett and D'Arcy Masius Benton & Bowles will not unbundle from the
full agency services, due to the countries' legal restrictions.
SMG's existing consortia agreements in markets such as Taiwan, Italy,
Belgium, Germany and The Netherlands will continue to operate. Starcom
will maintain its partnership with New Wave in Taiwan, while the group
will evaluate its consortia deals in other markets.
SMG has new plans for the region, and is open to further acquisition to
strengthen its services as well.
Booming interactive media have forced media agencies to dedicate special
services to the 'Net, and Mr Malloy said SMG was looking at developing
its Internet services around the world.
Since the launch of Bcom3, the three entities - Dentsu, the Leo and
MacManus groups - have formed several media ventures.
In Korea, a three-way media venture, PDS (involving Phoenix
Communications, Dentsu and Starcom) was set up to handle Procter &
Gamble's media business.
Last year, Starcom and MediaVest formed Quest to pitch for the P&G AOR
account and subsequently won the business in China.
With these ventures driven by clients' needs, Mr Malloy said the group
may use the same strategy again, depending on client and market
situation.
