Media agency UM is overhauling the way it works with clients, with a stronger focus on analytics, custom content and portfolio management. As a result, the IPG Mediabrands unit is introducing new pay-per-performance compensation agreements emphasizing client business growth.

In announcing the broader data and analytics strategy, called Media 3.0, UM said it signed a deal with The Nielsen Co. to deliver custom analytics for better understanding of media consumption. UM will also be working with 11 other data partners. The new operational model was developed in large part with McKinsey & Co.

In implementing the change, the company restructured its global management team.
Guy Beach, chief operating officer of UM North America, becomes global chief operating officer. Previously Beach had been global managing partner of J3, UM's dedicated Johnson & Johnson unit. Kristi Argyilan, previously global managing partner, becomes lead of transformation. David Cohen, U.S. director of digital communications, steps up as lead of global digital.

Jacki Kelly, global CEO of UM, has been a proponent of real-time performance metrics for clients and wants to put it in the center of UM’s planning process.

"Clients should demand greater accountability on their media investments. As their partner we will demonstrate the business value that media creates and maximize business outcomes," Kelly said.

UM works for clients like Coca-Cola, Mastercard, J&J, L’Oreal and Chrysler. The company also works for Microsoft and created the media strategy behind the launch of the company's Bing search engine. 

Earlier this month, Sony said it renewed its contract with UM for media planning and buying across six divisions in North America for three years.
 

In two weeks, Jim Hytner starts as worldwide CEO of Initiative, replacing Richard Beaven, who held the job for four years. Unlike Beaven, Hytner will be based in the U.K., where, as regional president of fellow IPG shop UM, he most recently oversaw work in 14 countries in Europe, Asia and Latin America. The 47-year-old Manchester native is relatively new to the media agency world, having joined UM in 2009 after more than 20 years on the marketer side (Barclays, ITV, BSkyB, Coca-Cola and Kraft). This week he reflected on Initiative’s strengths and weaknesses, pitching and losing business and why it’s good to have a restless boss.

Adweek: What are your perceptions of Initiative on the way in?
Hytner: It’s a surprisingly brilliant agency and it’s a very well-kept secret. And I intend for it not to be a well-kept secret (laughs).

What else?
The second impression was given to me. I saw a very, very, very senior client from a very, very senior organization a couple weeks ago because we wanted to talk to them about how I was going to take over. I said to him, “What’s brilliant about Initiative?” And he said, “World-class tools used by world-class people.” I must say that made my heart sing.

What does the agency need to work on?
To communicate better with people like you [about] who we work with and what we do for them. But that’s secondary and that just comes with success. Firstly, I would say, continuing to constantly refresh and reinvigorate oneself. The beauty of coming from a client background and having done 20 years of that is that I’m about as tired of the agency world as a newborn baby is of the world. I do see that in the agency world if you’ve been in it for 10 or 15 or 20 years, you can get quite tired of another brief from this client or another marketing director from this client. And I’m not bored with that. Quite the opposite. I see the opportunity to constantly—especially in the digital world—be refreshing, constantly be reinvigorating oneself and actually, me and my leadership team, be constantly discontented. And I mean that in a positive way.

How would you rate Initiative’s chances in Unilever’s global media review?
A pitch is a funny old thing. I welcome them, actually, particularly this one because there are three agencies (Initiative, Mindshare and PHD) and we all work with Unilever. When clients call a pitch sometimes it’s for fiscal reasons, sometimes it’s for fiscal and strategic reasons. With Unilever, they’re going to want the whole package. That gives us the opportunity to show Unilever what we’re made of. And from what I’ve seen so far, we are incredibly strong and have an incredibly good attitude about Unilever—what they do and what they'd want. 

How significant were the 2011 losses of Bayer and Home Depot?
I’m not going to go there because it’s A, history; B, I don’t know the details; and C, obviously it’s not something that I’m going to dwell upon.

Okay, but it relates to the challenges you’re facing. There are two holes where there used to be clients.
When you run a global network or when you’re part of a global network, no matter who you are, clients come and clients go. Every week one big network is winning something and one big network is losing something. So, the truth is I look at the Initiative business and it’s in rude health with or without losses because also have generated wins around the world. The benefit of a global network is if you lose an account in Germany, then suddenly Spain steps up to the plate. You lose an account in Malaysia and suddenly Thailand steps up to the plate. So, my focus is showing clients that we can drive their business results. 

How soon will the North American CEO be filled?
I have somebody in mind. It will be imminent. There will not be a significant gap between Tim (Spengler) leaving to Magnaglobal and my naming a successor.

So, within a month or two?
Yeah.

You must have a lot of clout to be able to do this job from the U.K. Would moving to the U.S. have been a deal-breaker?
No, it wouldn’t have been. I was quite happy to move to New York. But given that Unilever is based in the U.K. and that I am at GMT zero hours, we actually thought it would be pretty cool and more effective for me to do my job sitting in the middle of the world rather on one side of the world. That’s not to say that a global headquarters shouldn’t be based in America. It’s just that we decided that, on balance, there might be an advantage to me being based in London.  

What’s Matt Seiler like as a boss?
He’s inspirational because he’s restless. Restlessness is wonderful trait to have in a human being and in your boss.

Two regions down, two to go.

Johnson & Johnson is midway through a global review of its media planning and buying business with its decision in the North American market this week. The J3 unit of Interpublic Group’s UM has beaten back competition from Omnicom Group’s OMD and WPP Group’s MEC to retain that region’s business.

J&J said in a statement that the assignment encompasses its brands in the consumer, pharmaceutical and medical device and diagnostics sectors. The goal of the review, the company added, was to “identify cost savings and increase value.”

J3’s successful defense is significant because the U.S. is J&J’s largest market, with total media spending of nearly $800 million last year, according to Nielsen. Also, UM could ill afford to lose such a mega-account just a year after Microsoft left.

The agency, which manages J&J’s business at its New York and Toronto offices, has worked for the marketer since 1973.

The J3 selection comes three weeks after J&J consolidated its media business in Europe, the Middle East and Africa at UM and a new WPP unit called Primus. Aegis Group’s Carat, the previous lead shop in Europe, was among the other contenders for that account.

Now, the focus turns to Latin America and the Asia-Pacific region—the two remaining markets in J&J’s region-by-region review. Sources expect those contests to conclude by early next year.

Media piece down, creative piece to go.

The United States Postal Service, in a piecemeal do-over of its advertising review, has shifted its media responsibilities to UM, after 10 years at fellow Interpublic Group shop Campbell Ewald. The postal service's creative business has yet to be assigned.

Currently, Draftfcb is the interim lead creative shop, following the expiration of Campbell Ewald's contract at the end of September, a representative for the USPS said. Draftfcb, which already handled promotions and retail marketing, is now creating traditional advertising and direct marketing as well.

Contenders in the creative review could not be ascertained, but sources expect a decision in the next two months.

The USPS spent more than $91 million in media in 2011 and about $58 million in the first nine months of 2012, according to Nielsen. Those figures don't include online spending.

In the spring of 2011, the Postal Service issued a single request for proposals for its advertising business. That process dragged on for about 18 months without resolution, as the financially troubled organization grappled with the prospect of insolvency. 

About three months ago, the USPS cancelled the initial review, broke the business into a series of smaller RFPs and restarted the process. So, this year will finally mark the end of the odyssey that began in early 2011.

Interpublic confirmed a reorganization among the ranks of senior management at its Mediabrands unit: UM global CEO Jacki Kelley, has been named North America CEO, president of global clients at Mediabrands while Initiative global chief Jim Hytner takes on the CEO role for G-14 region. Countries included in that area are Australia, Brazil, China, France, Germany, India, Italy, Mexico, Russia, Spain, The Netherlands and the U.K.

In addition, Mediabrands has hired former Microsoft chief creative officer Gayle Troberman as the unit’s new chief marketing and ideas officer and Facebook’s former global agency relations Sarah Personette as the president of UM, North America. She replaces Yin Woon Rani, who joined UM in September 2011. It’s not clear if Rani will stay within IPG, a rep said. 

At UM, Daryl Lee, global chief strategy officer at IPG corporate sibling McCann Worldgroup, takes over for Kelley as global CEO. (Lee had been head of global strategy at UM before moving to Worldgroup a few years ago.) At Initiative, chief strategy officer Jim Elms succeeds Hytner as global chief.

In another shift, Peter Mears, CEO of Mediabrands Canada becomes president at Initiative, North America. He replaces Nick Pahade, who had been in the job since last March and is expected to take on another job within IPG.

Charles Schwab has hired Crispin Porter + Bogusky as its new lead creative agency.

The selection came after a review that began in September. Four agencies pitched the business and Charles Schwab narrowed the field to two in December. The Minneapolis office of Fallon was the runner-up.

The incumbent was Havas Worldwide, the agency formerly known as Euro RSCG, which had handled the account since 2004. Though no longer lead agency, Havas remains on Charles Schwab's roster, creating ads for the company's Active Trader and optionsXpress offerings.

Schwab spent some $70 million across media in 2011, according to Nielsen. That estimate does not include digital spending.

Crispin's Los Angeles office will lead efforts on the account. Charles Schwab is based in San Francisco.

“CP+B demonstrated a very strong understanding of our heritage, our target and our challenger brand history and philosophy,” said Jonathan Craig, Schwab's chief marketing officer. “The work they developed delivered in a fashion that was true and credible to our voice, and we’re looking forward to great things to come.”

Craig launched the review shortly after he replaced Laurine Garrity as marketing chief last year.

Media planning and buying were not in play and remain at Interpublic Group's UM. External View Consulting Group in Culver City, Calif. managed the search.

Nationwide Mutual Insurance Co. is reviewing its media planning and buying business.

Last year Nationwide spent more than $330 million in media, according to Nielsen. That figure does not include Internet or business-to-business spending.

Cheil's McKinney handles traditional media planning and Interpublic Group's UM buys media for the insurance company, which is based in Columbus, Ohio. Each incumbent is expected to defend.

Nationwide’s creative business, at McKinney, is not up for grabs.

McKinney, which is based in Durham, N.C., began working for Nationwide in 2009 after a review in which it won the creative business from IPG’s TM Advertising. UM has worked for Nationwide since 2001 and was retained after the company conducted a media review in 2009.

It is not clear if Nationwide is including digital duties, at Engauge, in the review. The client declined to comment on details about the search and Engauge did not respond to inquiries.

However, in a statement, Nationwide CMO Matt Jauchius said: "We are open to a variety of incumbent and new agencies, and we reserve the right to consolidate all traditional and digital planning and buying, or to keep it piecemeal as we deem appropriate."

The executive also said the company plans to increase media spending this year "consistent with the advertising arms race in the P&C insurance category."

Is it time to blow up the agency trading desk model? Maybe not. But changes are afoot as the industry grapples with the long-term prospects of owning and maintaining separate stand-alone businesses designed to deliver audience-based buying.

Following a recent leadership shake-up within its Mediabrands unit, Interpublic executives were said to be mulling over the future of Cadreon, the company's trading desk business. The discussions focused on whether the agency holding company should decentralize its trading desk practices as programmatic ad buying grows in importance, or continue to house them in a stand-alone entity with its own profit and loss structure.

As it turns out, a centralization strategy seems to have won out at IPG Mediabrands, at least in the U.S. The company is expected to announce the formation of Magna North America, a new entity that will house the holding company's various data and platform assets. The move is being driven by an overarching goal at IPG to move at least 50 percent of its buying to automated platforms over the next several years.

Kristi Argyilan, most recently chief transformation officer at UM, has been named president of Magna North America. She'll report directly to Magna's worldwide CEO, Tim Spengler.

Included within Magna North America are IPG's finance and technology divisions, the search agency Reprise, the tech platform AMP and Cadreon, which was rumored to be on its death bed. According to sources, some factions within IPG were looking to pull audience-based, automated buying back within individual agencies rather than within a centralized group.

But according to Matt Seiler, CEO of Mediabrands, centralization should reduce competition within the various IPG factions while providing more clarity.

"With Cadreon as a separate business with its own revenue targets and its own P&L, and with individual agencies saying, 'We can do it here,' we had an internal conflict. We had built artificial boundaries that may have limited its growth. This says, 'We only do it in one place. Through Cadreon within Magna.' It's kind of dumb to have your operating units competing with each other, so we're eliminating barriers," said Seiler.

While IPG's maneuvers are specific to that company's unique issues and experiences, the same sorts of conversations are being held across the industry as dollars swell, agency territorial battles flare up and savvier clients continue to ask hard questions. The agency trading desk is at a crossroads.

Here’s the essence of the debate: Should all of the company’s audience-based, real-time media buying be conducted through a centralized group, or should buyers at Initiative, UM and other IPG shops be able to handle that sort of thing going forward?

Underneath the debate may be an acknowledgement that the party may soon be over (or is at least running out of beer). Trading desks like Cadreon, VivaKi’s Audience On Demand, Omnicom’s Accuen, WPP’s Media Innovation Group and GroupM’s Xaxis were established to help agencies take back the hefty margins they were ceding to ad networks in the mid-2000s, while also looking to move the industry forward. Profit-starved agencies have long seen trading desks as a major shot in the arm.

But as more dollars are spent programmatically, more clients are starting to ask questions. And individual agencies are pushing to take more control of their own digital ad buying.

Plus, many insiders report that despite the high profit margins generated by trading desks (think 40 percent to 50 percent), not enough clients were using them. The thinking inside Mediabrands and other agencies is that individual digital ad teams may be more incentivized to spend client dollars in this fashion if they’re given more choice and control. The hope is that the cost of the technology employed by trading desks could be spread across agencies.

“Most agencies want the great profit margins,” said an insider. “But they’re afraid that clients will call BS. The money essentially goes over the wall, and they don’t know what happens to it.”

Clients are starting to ask about what happens over that wall. One tech vendor said this has started impacting pitches and reviews. He described a recent conference call during which a client grew exasperated with its agency, which was unable to provide even basic details about where its ads were being run—since they were being purchased via an agency trading desk.

For example, according to sources, Kimberly-Clark has insisted that its digital agency of record, Mindshare, handle all of its audience buying rather than Xaxis. AT&T has made the same request of its GroupM shop MEC. Bob Arnold, Kellogg's global digital strategy director, recently questioned the model at a Digiday conference.

For its part, Procter & Gamble has shifted such buying to Audience Science over its agency partners' own tech. And according to sources, Ford, Citibank and Unilever have also opted out of their agencies' trading desks.

“We are starting to hear from more and more clients that their ad spending is totally opaque because it's centralized via a trading desk,” said Emily Riley, vp product and marketing at Audience Science. “That’s not kosher for most clients. Big CPG brands are just not going to stand for it.”

Especially when the dollars get serious. Early on, trading desk budgets were mostly nabbing experimental budgets. Now, they can account for 10 percent of a brand's budget. At MediaBrands, the goal is to shift programmatic buying to 20 percent or 30 percent. It's going to be hard for many clients to stomach that much money flowing through trading desks, especially if they think they're paying some sort of markup.

“It’s straight up arbitrage in their faces,” said one former trading desk exec.

Naturally, many top agency executives disagree with that assessment and remain bullish on the model. “Our strategy for trading desks is clear,” said Rob Norman, CEO of GroupM. "Xaxis is our audience-buying company. It works on a business model that enables it to access and apply all available client and other data securely to all available inventory, including inventory not available in ad exchanges. We think that's important. We believe performance against benchmarks should be the sole judge of the success or failure of Xaxis."

In fact, if any trading desk is succeeding, insiders say it's Xaxis. Some estimate that the company is generating $300 million to $400 million a year—with a healthy cut sent to GroupM. On the flip side, Cadreon struggled to tally close to $30 million, sources said.

Seiler balked at that assessment. "Let me dispel the myth on Cadreon not doing as well as the other guys," he said. "Cadreon is not about arbitrage. That's different than other places. There is concern out there in the marketplace with companies like Xaxis because there is arbitrage going on, a 'clients served second' kind of thing. A lot of agency groups say they are structured around their clients' needs. That's not true. Kinda sorta isn’t enough. You have to be transparent, or you're not."

As for the Kimberly-Clark decision regarding Xaxis, Norman said, “Some clients prefer that we work with third parties they have selected, and we train our people to work with them in the most effective way for the advertiser. In the case of Kimberly-Clark, that partnership is operated inside Mindshare.”

Regardless, ad tech vendors are starting to build their products to work more nimbly in a future where they have more clients, not just a select few trading desk partners. “Brands aren’t dumb,” said one vendor. “There hasn’t been enough spend to matter. But with this shift to programmatic premium, the money gets real. Clients are going to expect you to act like an agent, not an ad network.”

The bigger question is, has the trading desk model ever worked for agencies? Proponents typically brag about the hundreds or thousands of campaigns they have for clients via their trading desks to date. But one former agency insider threw cold water on those claims.

According to some former agency executives, most global agencies have 500 to 700 clients. So even if a few dozen clients are using a trading desk platform, each running multiple campaigns, that’s a drop in the bucket. "It’s actually been quite hard to get more clients on board,” the insider said.

Why? Trading desks simply don’t pay off for certain clients, who either rely on low-cost cost per acquisition tactics or are very concerned about site environment.

And even for clients that do test trading desks, they’re not always immediately effective. “It takes a long time for an algorithm to learn and an enormous amount of volume needs to be captured," said an insider. "It may take eight to nine months and that’s hard for clients to stomach."

There’s also the cost of technology—never an agency sweet spot. One exec estimated that trading desks can cost $7 million to $10 million just to develop, and constantly need to be maintained. “It’s a sinkhole,” she said.

That cost is a great argument for stand-alone agencies to take over audience buying. Another is simple long-term relevancy. “To me, if agencies don’t start owning the process, they’ll start sending brand agencies to the nursing home,” said one agency exec.

Of course, many dismiss this way of thinking. Operating trading desks requires experts. "They are here to stay," said PubMatic co-founder, CEO Rajeev Goel. "Overall, the model works. And it takes a real expertise and skill."

"There's too much money to be made," said another insider. "Agencies aren't going to give up yet."

McCann Worldgroup prevailed in a holding company shoot-out for Zurich Insurance Group, beating contenders that included the incumbent Publicis Groupe and WPP Group. The Worldgroup pitch team represented parent Interpublic and included efforts from McCann Erickson, MRM and UM. The global assignment covers advertising, media and digital marketing.

Account revenue across all Worldgroup marketing units is estimated at more than $10 million. Global media spending on Zurich was not available. Spending in the U.S., where Zurich is a leading commercial property and casualty insurer, approached $10 million last year, according to Nielsen. That figure, however, does not include online outlays.

The Swiss-based financial services company launched the agency review nearly a year ago after having picked Publicis in 2004 as a marketing partner in most of its key markets like Europe, North America and Asia. In that earlier review, the Paris-based holding company replaced 3,700 marketing vendors and competed against WPP’s Ogilvy & Mather unit for the business.

Zurich Insurance has adopted a golf-centric global marketing strategy and last year signed a five-year extension as title sponsor of the Zurich Classic of New Orleans through 2019.
 

Last week the online ad industry was abuzz over the Digital Content NewFronts. For the most part, buyers raved about the improved quality of the video content peddled by the likes of AOL, Yahoo, YouTube and Hulu. And the collective buzz definitely seemed to elevate the medium's profile, though some complained about overkill or a lack of breakout, hit-worthy content.

Now comes the hard part. In an open letter to the big digital video content companies, a copy of which has been obtained by Adweek, top buyers from Digitas, UM, Carat, GroupM, Zenith, Starcom and OMD urged ad sellers to do better. The group, which included UM's chief media officer David Cohen, Amanda Richman, Starcom USA's president of investment and activation, and John Nitti, Zenith's president of activation, called on industry sellers to promote their host of new Web series and make them much easier to buy and measure.

"We know that not every show will be a runaway hit, but perhaps there could be enough semi-hits that in aggregate, can help build audience-at-scale. So now that you’ve built it, let’s help consumers discover it," reads the note. "We want to invest in your programming. We want hits."

But these hits must be understood and sold through to clients. "Answer this question and you’ll have lots of folks like us leaning in and listening: What are the bridge metrics that paint a portrait of a single piece of content or programming within the broader, non-linear Web of viewing and engagement?

"Together we will transform our industry and accelerate the marketplace," the letter says.

See the full note below:

To: Digital Video Publishers Everywhere: A Call to Arms

From: David Cohen/Universal McCann, Adam Shlachter and John McCarus/Digitas, Amanda Richman/Starcom, Walt Cheruk/Carat, Rob Norman/GroupM, John Nitti/Zenith, Ben Winkler/OMD

Date: May 8, 2013

With the close of the second annual Digital Content NewFronts, there are high expectations and a few critical questions to address. Can DCNF really create market-shaping brand opportunities? Have we overcome the barriers to closing the “big deals?" Will we, and the rest of the buying community, put equitable skin in the game? The authors of this letter declare yes to all of the above, and for one reason: We must.

We have a unique opportunity to reinvent the way we work together to capitalize on this. To change the narrative, and leverage measurement—across the now and next screens—that elevates digital video beyond an extension of TV. To disrupt the commodities-like pricing for broad segments of audiences, to new currencies based on the response and reactions of the people we want to reach.

Few will argue that the numbers, habits and behaviors of consumers are undeniably shifting, and have been for years. Yet, there are some who challenge the viability of the digital content marketplace and the publishing community’s ability to capitalize on it. We will prove them wrong. Together we will transform our industry and accelerate the marketplace. We will give digital video (and its consumers) the attention, the brands, and yes, the dollars, that it deserves.

Here are three calls to arms to help us get there:

1) Give your shows the promotion they need and deserve. 
One of the biggest challenges in betting big on original, digital programming is giving advertisers the confidence that we can actually deliver audiences-at-scale. If you build it, will they watch, love and follow? Likely not without a little help. You (the digital publishing community) have an arsenal of data. You know your audiences best. Use that data to find them. Get aggressive to intrigue, build, and attract an audience that is as big as it is valuable. We know that not every show will be a runaway hit, but perhaps there could be enough semi-hits that in aggregate, can help build audience-at-scale. So now that you’ve built it, let’s help consumers discover it.

2) Give us and our clients (more) reason to believe
Simply put, here’s the ask: give us a reason to believe and trust our gut with metrics for guarantees. Let’s call this the “gut-guarantee.” We want to invest in your programming. We want hits. We want greater regularity in show quality. We want an arsenal of success stories. Yet, we need your insights on how our audiences are watching, sharing, shouting and discussing your shows to get excited. Pitch the programs in a way that mirrors what people see (and do)—screen-blind, what they share, how often and why. Give us hope (backed by metrics) that you will find new audiences who are as irresistible to brands as they are engaged with your programs.

3) …and back the faith with measurement.
Help us build the bridge to these other screens. Not only through reach but also with metrics that value the true power of digital—engagement and interactivity—that builds dialogue with brands. Bring us the consumer insights; both viewership and video-specific engagement. Help us measure video with more transparency, and commit to measuring and valuing sharing, conversation and comments.

Let’s take it one step further. Answer this question and you’ll have lots of folks like us leaning in and listening: What are the bridge-metrics that paint a portrait of a single piece of content or programming within the broader, non-linear Web of viewing and engagement?

We need you…

Yes, the video terrain is a constant “new frontier.” Yes, new outlets for distribution, discovery, and consumption are developed every day and across every platform—mobile, tablet, connected TV, and now Facebook and Twitter. But because of that, the best way for digital video to attract big dollars is to break outside of the traditional channel silos. We’re listening with our gut, and will act on the guarantee. That’s our promise to you. We also promise to commit to proactive program development with our most important media and digital publishing partners.

House of Cards actor Kevin Spacey said it best, “Give people what they want, when they want it, in the form they want it in, at a reasonable price—and they’ll buy it and they won’t steal it.” That’s not to say that we should be charging for all digital content. But Netflix credits the series in large part for bringing in two million new subscribers in the first quarter of 2013. They had the confidence in their consumer to make a huge, high-quality content investment, and it paid off. Help us prove that we can create big successes. Help us show that with growing audiences come new opportunities that will command immediate action.

Together, let’s do this. If we do, brands will come, and the dollars will follow. We’ll put skin in the game if you will too, and many of you already have. A big thank-you to some of the publishing partners who have fearlessly addressed the above head on. And based on what we have seen at the DCNF last week, we are collectively confident that the video neighborhood will thrive.

Look forward to hearing from you,

Adam, Amanda, Ben, David, John, John, Rob, Walt

For a digital industry, these guys sure love their letters.

In response to yesterday's open letter to the Web video ad seller community from a cadre of top digital buyers, IAB president and CEO Randall Rothenberg fired off an open letter of his own to the digital gang of eight, which includes Digitas' Adam Shlachter, Zenith's John Nitti and GroupM's Rob Norman.

The buyers used their letter to push the Web video industry to raise its collective game by delivering big hits, better metrics and stronger stewardship of the wealth of new shows rolled out during last week's Digital Content NewFronts. Rothenberg and the IAB, which oversaw the execution of the NewFronts, have answered back. Rothenberg and the IAB agree with most of the buyers' assessments but think they didn't go far enough.

"Even if we collaborate on all the actions you outlined in your open letter, we will not achieve our mutual goals," Rothenberg wrote. Why? In part, because agencies are structured in ways that prohibit cross-media planning. "Agencies remain fragmented in the ways they develop strategies, craft creative, plan, and buy different media, reflecting equivalent organizational and process fragmentation inside client companies," Rothenberg wrote.

"All of this threatens to take a remarkable opportunity and shred it into a thousand expensive, proprietary solutions," he added. 

Rothenberg also urged agencies to do better creative, make buying much simpler and work to protect intellectual property. He even put out a request for some seed funding to be used in establishing a Digital Video Center of Excellence aimed at bettering the medium for all.

Here's the full letter:

To: David Cohen/Universal McCann, Adam Shlachter and John McCarus/Digitas, Amanda Richman/Starcom, Walt Cheruk/Carat, Rob Norman/GroupM, John Nitti/Zenith, Ben Winkler/OMD
cc: Advertising Agency Executives Everywhere
From: Randall Rothenberg, IAB

Dear David, Adam, John M., Amanda, Walt, Rob, John N., and Ben:

Thank you for your open letter yesterday praising the presentations, programming, productivity, and outcomes of the Digital Content NewFronts 2013. Fifteen top media companies presented more than one hundred original digital video shows that will soon bring laughter to the lips and stimulate the minds of men, women and children around the world, distributed across laptops, PCs, smartphones, tablets, and connected TVs everywhere. I think I speak on behalf of all NewFronts presenters—indeed, for the entire digital publishing industry—when I say we agree with you: This is a revolution in marketing, advertising, and media…and a transformation in consumer engagement.

We particularly welcome and appreciate the way you positioned the next stage of this revolution: as an activity in which agencies, marketers, publishers, and technology companies must work together to develop consensus solutions that will elevate opportunities for all of us. Sure, we will negotiate hard with each other, and compete fiercely to win business, publisher against publisher and agency against agency. But that should never stop us from collaborating for the greater good of our conjoined industries, our customers, and our consumers.

We also agree that for this revolution to truly alter the way we do business, we've got to commit ourselves to practices that benefit consumers, bolster transparency, build revenues, and boost profits for marketers, agencies, and publishers. So we dedicate ourselves, as individual publishers and collectively through the IAB, to work with you and your clients to, as you put it in your letter, “change the narrative, and leverage measurement—across the now and next screens—that elevates digital video beyond an extension of TV. To disrupt the commodities-like pricing for broad segments of audiences, to new currencies based on the response and reactions of the people we want to reach…[and to] give digital video (and its consumers) the attention, the brands, and yes, the dollars that it deserves.”

To accomplish this, we pledge to collaborate with you on the three items you enumerate in your “call to arms”: program promotion and discovery (including digital and social promotion), processes for audience-delivery guarantees, and measurement solutions that tell the true story of digital content’s reach and influence.

But we cannot stop there. Because even if we collaborate on all the actions you outlined in your open letter, we will not achieve our mutual goals. If we are truly to revolutionize marketing, advertising and consumer engagement, we must work together—unendingly—to embed other principles in our daily activities. Accordingly, speaking for all digital publishers, we ask you and the agencies you represent, as well as all other agencies, to commit to the following.

Make cross-screen programming, marketing, and consumption a reality. Perhaps the biggest message emerging from the 2013 NewFronts is that everyone—consumers, advertisers, and publishers—wants seamless cross-screen experiences. Yet despite our violent agreement, it’s hard to pull off. Agencies remain fragmented in the ways they develop strategies, craft creative, plan, and buy different media, reflecting equivalent organizational and process fragmentation inside client companies. Publishers and technology companies, in turn, pursue their own products and services for cross-screen distribution, measurement, and analytics. All of this threatens to take a remarkable opportunity and shred it into a thousand expensive, proprietary solutions. Let’s collaborate on the essential technologies and standards that will make it easy for consumers to discover programs, start watching shows and ads on one screen, pick them up on another screen, and complete their experience on yet another screen.

Simplify the marketing-media supply chain. We’ve all heard the same complaint: “Television is so simple; I can place a multi-million-dollar buy with a handshake. Why is digital so complicated and expensive to transact?” One answer, unfortunately, is an interactive advertising supply chain that’s been put together piece by piece, year by year, with chicken wire bytes and spit bits. While that’s been great for innovation and competition, it’s been a nightmare for operational efficiency, and has added untold millions in costs to our collective businesses. And with the rise of programmatic buying, it only threatens to get worse, as exchanges, real-time bidding solutions, new forms of creativity, social sharing opportunities, and mobile consumers multiply. Let’s commit to cross-industry solutions that aim to take complexity and cost out of the digital advertising supply chain, and make low-cost “handshake buying” a reality in interactive advertising.

Be as creative as possible. We’ve got to be honest with each other: We face a clutter crisis. Ads are or soon will be everywhere—and with the rise of programmatic buying and other forms of automation, will be everywhere-squared before too long. The result is common conversation in our industry: “banner blindness,” consumer disengagement, and rebellion against the fact and craft of advertising. The history of advertising tells us there is only one way to cut through the clutter and generate affinity for advertising and for the brands that advertising builds—creativity. Simply put, great results require great advertising. Great creativity can work so much harder in interactive media than in other environments, because it allows consumers to dive in, ask for more, pull things out, share their experiences, and participate in the story-building. Some of that creative advertising will be “native”—unique to the site or the individual publisher. But scale economics dictate that much of that creative advertising will have to cross sites and cross screens. Let’s work together to venerate the big ideas and great creatives behind them, as we have done in other media, and also to find standards and processes that will enable the best advertising to flourish in digital environments.

Make measurement make sense. In your open letter to us, you asked for “metrics that value the true power of digital—engagement and interactivity” and for “the bridge-metrics that paint a portrait of a single piece of content or programming within the broader, non-linear web of viewing and engagement.” To which we answer: absolutely! We have to get not just reach and frequency right, but demographics, social sharing, and more. But we have an ask in turn: Please commit yourselves, your agencies, and all other agencies you can influence to participate in the cross-industry “Making Measurement Make Sense” initiative. 3MS is the largest digital measurement standardization project in history; already, marketers, agencies, and publishers, working through the ANA, the 4As, and the IAB, have committed almost $6 million to this initiative, which is forging consensus around the metrics and currencies that matter. While many of you have been deeply involved with 3MS, some agencies and clients remain distant from the process, and continue to call for special metrics and one-off currencies that add complexity and cost to the industry as a whole. However flawed conventional television metrics may have been, they have worked for more than 60 years because all parties stuck with a consistent understanding of shared risk and reward. Let’s get the entire ecosystem and all its major players committed to the 3MS process, and to making the Media Rating Council the neutral body for setting, evolving, and policing industry measurement standards.

Protect consumer privacy. The uniqueness of the Internet is that it is the only medium that allows media and marketers to go globally broad and minutely targeted at the same time, while respecting consumer anonymity, privacy, and choice. Yet regulatory constraints—proposed and in some cases already imposed by government bodies or large technology companies—threaten the ability of consumers to receive and companies to deliver targeted programming and advertising. These proposals may even undermine our ability to offer cross-screen consumption and measurement. The entire media and marketing industry is under threat—from both activist groups that seek to inflame consumer privacy fears to eliminate advertising from digital environments, and from our own relative silence about consumers’ legitimate concerns for the security of their data and the privacy of their interests and activities. Working through the cross-industry Digital Advertising Alliance, our industry has done a good job creating a self-regulatory program and mechanism with real teeth; our “AdChoices” program is distributing 1 trillion notifications to consumers each month about how to opt out of or into targeted advertising, and millions of consumers have exercised their choice. But here again, while many agencies and clients have been involved in self-regulation, some still remain distant. Let’s commit to even more consumer education, and to getting industry leaders to speak more openly about both the value of targeted advertising and programming, and about the harm to consumers and economies that will result from bad regulation or poorly imposed technology constraints.

Protect intellectual property. Unique, proprietary content is the life’s blood of media and advertising. Original content is the magnet that attracts consumers to media, thus creating the audiences that advertisers need. But the ubiquity and porousness of the Internet long have threatened the creators of content; it’s far too easy for pirates to steal their IP and distribute it freely and widely. In some cases, the pirates make their money not from reselling the stolen IP, but from advertising on the sites where the stolen goods are offered. Let’s find consensus solutions that limit the use of advertising to support the piracy of intellectual property, but without destructively re-architecting the Internet or hindering the distribution of legitimate content and advertising.

We’d like to close with an offer. IAB has planned for several years to launch a Digital Video Center of Excellence—a group of people within our organization dedicated solely to initiatives that will grow the marketplace for original digital video programming. The Digital Content NewFronts provided some seed money that will allow us to get this started, at least in a small way. Why not help us get it going? At the very least, let’s plan a meeting—soon—among key companies representing the most important components of the burgeoning digital video ecosystem, to brainstorm our collective priorities, the ways we can most productively pursue them, and how we can work together to build a mutually vibrant video future.

On behalf of the NewFronts presenters—on behalf of all publishers—we’ll gladly buy the pizza and beer.

Seriously, on behalf of the industry, we welcome your call to arms, and pledge our collaboration.

Regards,

Randall Rothenberg
President & CEO
IAB

Suzanne Powers, global strategy officer at Crispin Porter + Bogusky, is moving to McCann Erickson as evp, chief strategy officer. She succeeds Daryl Lee who in February was named global CEO of UM, McCann Worldgroup’s global media agency partner.

At CP+B, Powers led the global development of the agency and worked across the agency’s offices and brands. Prior to that role, she was the global strategy director of TBWA where she worked with all of the shop’s brands, including Mars, Nivea and GSK.

Powers’ predecessor, Daryl Lee, was brought over to McCann Erickson as chief integration officer in May 2010 by former Worldgroup chief Nick Brien. Lee had previously been head of global strategy  at UM.

Harris Diamond, now CEO of Worldgroup, said of Powers: “She brings us a unique perspective on how to build global insights and ideas across our brands, geographies and culture.”
 

Nationwide kept its U.S. media business in the family by consolidating its at UM, a longtime roster shop.

UM, out of its offices in New York and Detroit, will handle planning and buying in both traditional and digital media. Nationwide spent more than $330 million on media last year, according to Nielsen.

UM, a unit of Interpublic Group, has worked for Nationwide since 2008 and was retained after another media review, back in 2009.

"UM has the critical skill and scale to meet Nationwide's needs, while tailoring specific solutions for our diverse business portfolio," said Matt Jauchius, the insurer's chief marketing officer.

Previously, the account was split among several shops, including McKinney (media planning), UM (media buying) and Rosetta (digital media buying). So, the losses at McKinney and Rosetta are UM's gain.

Today's consolidation came after a review.

Creative responsibilties were not in play and remain at McKinney, which is based in Durham, N.C. McKinney's relationship dates back to 2009.

The Hershey Co. consolidated its global media planning and buying at Interpublic's UM network, sources said.

Finalists in the review included Publicis Groupe’s Zenith and incumbent Omnicom’s OMD.

In July, when Hershey's announced second-quarter sales rose 6.7 percent, it also said advertising investment this year will rise 20 percent. Last year Hershey spent $450 million in measured media, per Nielsen. That amount does not include online spending.

The confectionery company launched a media agency review last December for TV, print, digital in both the general and Hispanic markets in the U.S. as well as globally, which includes growth regions like China, Mexico, India and Brazil.

In a statement, Hershey’s said the selection of UM was based on a qualitative and quantitative analysis of the participating agencies, including their capabilities in the U.S. and in key international markets. The transition from OMD to UM begins Sept. 1.

OMD has handled Hershey’s media buying since 2002 when Hershey consolidated the business after a review. (Media planning remained with aligned brand agencies.) That consolidation was a change from Hershey’s historical media-buying relationships, which involved separate agency of record assignments by dayparts. At the time the company said, “The new single point of contact for all media buying will enhance Hershey Foods’ ability to take advantage of cross-platform and bundled media deals from network ownership deals.”

The review did not impact Hershey’s creative agency, Havas’ Arnold.

Lockheed Martin tapped McCann Erickson in New York and Interpublic sibling UM to handle global advertising and media responsibilities, sources said.

Last year, Lockheed Martin spent nearly $4 million in measured media, according to Nielsen. That amount does not include internet marketing.

The agencies won the business after a review. Other finalists were Arnold and Doremus. Keiler & Company, Farmington, Conn., was the lead incumbent. Keiler was invited to defend, but did not participate in the review. 

Reps at McCann and UM could not be reached, as was the case with those at the Bethesda, Md.-based global security and aerospace company.

Last year, Lockheed Martin’s centennial campaign from Keiler won creative recognition for print and online ads featuring workers and technologies that contributed to the company’s milestone achievements.

The wins follow a string of new business at McCann New York this year, including Pillsbury, Cuervo, United States Postal Service, Frozen Food Council and Ignite Restaurant Group which added Romano's Macaroni Grill and Brick House Tavern + Tap to McCann's Joe's Crab Shack account won last year. The Interpublic agency also landed Zurich Insurance and was given sole  responsibility for General Motors' Chevrolet account.

MasterCard’s new chief marketing officer Raja Rajamannar has launched a global media agency review, after joining the company in September.

The financial services company's lead media agency is Interpublic Group's Universal McCann.

Sources put global spending at more than $200 million. In the U.S. alone last year, MasterCard spent nearly $105 million in media, according to Nielsen. (That amount does not include Internet spending or business-to-business marketing.)

A MasterCard representative issued a statement:

“As part of regular business practices, MasterCard regularly reviews and assesses industry resources as part of responsible vendor and agency management,” the company said. “We can confirm that MasterCard is conducting a review of our media agency partners. This activity is limited only to the media buying activities and not to any other agency relationship.”

The MasterCard rep would not identify which other agencies are incumbents in the review but said UM was invited to participate in the process: "(We) look forward to working with them through this effort."

A UM spokesperson said the agency will defend the business.

The company added that McCann XBC (ExtraBoldCondensed), a new unit created late last year for MasterCard, will continue to work for the brand. Joyce King Thomas, the former creative chief of McCann Erickson New York and co-creator of MasterCard’s long-running “Priceless” campaign, returned to the agency to run XBC in December.

The timing of Microsoft's global marketing services review is curious, given that the company is still searching for a new global CEO.

Sources expect the new chief executive to have a hand in marketing, which could trigger changes in the those ranks. Still, Mark Penn is the marketing chief at the moment, and certainly Microsoft always aims to deliver better advertising more efficiently. Also, a pitch like this gives corporate and divisional marketing leaders a chance to prove their worth before a new CEO arrives.

Microsoft spends upward of $1 billion globally on media each year and roughly half of that spending is in the U.S. In 2012, for example, domestic media spending approached $510 million, according to Nielsen. And through the first nine months of last year, U.S. spending exceeded $540 million. Those figures don't include online outlays, however.

The big players on Microsoft's roster of agencies include Publicis Groupe's MediaVest, which plans and buys media in North America; sister shop Razorfish, which creates digital ads; Interpublic Group's UM, which handles media responsibilities outside of North America; and WPP Group's Wunderman, which handles direct marketing globally. Wunderman also functions as Microsoft's network for distributing ads around the world.

Ad agencies on the roster include MDC Partners' Crispin Porter + Bogusky, independent Omelet and WPP's Young & Rubicam, which recently landed a business-to-business assignment Interpublic's Deutsch previously handled. Omelet produced the ongoing "Honestly" campaign for tablets.

Given the scope and complexity of the review, Microsoft has contacted select holding companies about putting together teams to pitch the business, including Publicis Groupe, Interpublic and WPP, sources said.

The review has just began and and a request for proposals is expected later in the month. Joanne Davis Consulting in New York is managing the process, according to sources.

The consultancy referred calls to Microsoft, which acknowledged the review. Microsoft aims to complete its search in the second quarter of the year.

Carat has won most of MasterCard’s global media business, with the exception of Latin America, which will remain at UM, sources said.

Global media spending is estimated at $200 million, including $105 million in the U.S. alone.

Sources identified the other review contenders as Omnicom's PHD; Publicis Groupe’s MediaVest; a team from WPP Group’s GroupM that was led by Mediacom; and the incumbent, Interpublic Group's UM.

MasterCardlaunched the review in November a few months after the company installed Raja Rajamannar as its new chief marketing officer. Rajamannar previously was an evp and chief transformation officer at WellPoint.

Not in play were lead creative responsibilities, which remain at McCann XBC, a unit of McCann Erickson that’s led by Joyce King Thomas. 

Executives at the Purchase, N.Y.-based MasterCard could not immediately be reached but sources said that the company had notified the finalists of the outcome.

Microsoft began its global advertising review with the aim of consolidating its business within a single ad holding company. In the end, however, the business was split between two: Interpublic Group and Dentsu, Microsoft said today.

That’s still fewer than the current four holding companies that have relationships with the technology giant (WPP Group, Interpublic, Publicis Groupe and Dentsu). Each company put forth a team to pitch Microsoft’s massive marketing services business, which includes traditional ads, direct marketing, digital ads and media planning and buying. Total account revenue is estimated at $100 million.

Going forward, creative responsibilities—including traditional, direct and digital ads—will be handled by IPG shops like McCann Erickson, The Martin Agency and Erwin Penland. McCann, via its Craft unit, also becomes the distribution network for Microsoft ads around the world. Losing business in this consolidation are WPP shops Wunderman and Possible, Publicis Groupe’s Razorfish and independent Omelet, among others.

Media planning and buying, and search advertising, meanwhile, has been consolidated at Dentsu Aegis units like Carat. Previously, media responsibilities had been split chiefly between Publicis Groupe's MediaVest (U.S.) and Interpublic's UM (overseas). So, Aegis' gain is a loss for both MediaVest and UM. Global media spending exceeds $1 billion annually.

In a statement, Microsoft chief marketing officer Chris Capossela said, “We believe both [IPG and Dentsu Aegis] will help us communicate more strategically and efficiently in a rapidly evolving marketplace.”

The business shifts come amid a period of reinvention at Microsoft. Last year, the company moved toward a more centralized operation and in February, insider Satya Nadella succeeded Steve Ballmer as CEO. Even after the review began, Microsoft took marketing leadership responsibilities previously shared by two executives and put them in the hands of a single exec: Capossela.

Moreover, the company, in its initial request for proposals, signaled its intention to shift away from individual, product-specific ads and toward broader campaigns directed at consumers and businesses. And now finally, Microsoft has picked its partners for achieving those goals.

Joanne Davis Consulting in New York helped manage the search.

UM has won media responsibilities for Build-A-Bear Workshop in North America and the U.K. without a review.

In the U.S. alone last year, the retailer spent more than $12 million in media, up from about $10 million in 2012, according to Kantar Media. The bulk of the brand's spending takes place in America, with smaller amounts invested in the U.K. and Canada.

The Interpublic Group agency succeeds MDC Partners' RJ Palmer on the business. In March, MDC merged RJ Palmer with TargetCast to create Assembly.

For its new client, UM will handle the planning and buying of traditional and digital media and analytics. Three offices will work on the business: New York, Detroit and London.

Other UM clients include Chrysler, Coca-Cola, Hershey's, Johnson & Johnson, L’Oreal Paris, Microsoft, Nationwide and Sony.