MEDIA FORUM: Are US clients now looking to media specialists? When Carat served notice two years ago that it meant business in the American market, there were those who laughed. They’re not laughing now. Was last week’s win of the dollars

Last week, Carat’s American office, Carat/MBS, won the US account of the pharmaceuticals company, Pfizer. Worth a claimed dollars 200 million, it is the Carat network’s biggest ever win and thrusts it into top ten media buying points in the US. There are probably lots of Viagra jokes to be had here - should anyone be shameless enough to make them - as Pfizer is the manufacturer of that wonder drug.

Last week, Carat’s American office, Carat/MBS, won the US account

of the pharmaceuticals company, Pfizer. Worth a claimed dollars 200

million, it is the Carat network’s biggest ever win and thrusts it into

top ten media buying points in the US. There are probably lots of Viagra

jokes to be had here - should anyone be shameless enough to make them -

as Pfizer is the manufacturer of that wonder drug.



Pfizer’s budget is almost as large as Coca-Cola’s but the celebrations

at Carat and its Aegis holding company (whose share price responded

appropriately) were not just about size. This is being touted as an

important milestone in the evolution of the US media industry - it’s the

first time an advertiser of Pfizer’s pedigree has plumped for an true

media independent.



The US market has never really had a credible independent sector. There

are two main reasons for this: first, US clients are very conservative;

and second, the first wave of independents rapidly acquired a dodgy

reputation.



These were people who made their money by broking or by keeping

discounts for themselves - they were certainly not the people to be

trusted with big network campaigns. Traditionally they lacked the

expertise and resource to be serious players in the world’s largest ad

market. In Europe, independents could wing it in their early days; in

the US, that was never an option.



That’s not to suggest that the US market hasn’t been evolving - and for

that we must thank Procter & Gamble. Following a drive to consolidate

its media arrangements in Europe and an ensuing review of that exercise,

P&G began to take the best European practices and to implement them in

the States. P&G’s decision to unbundle US media prompted a number of

other companies to follow suit. In turn, that made the big agency groups

look at spinning off their media departments, creating standalone

branded media operations.



That, however, hasn’t been to the benefit of indigenous media

specialists or entrants like Carat and CIA. Business has always tended

to stay at media operations owned by one of the creative agencies on a

client’s roster.



The US market is, after all, an extremely tight-knit community.



Until now, that is. David Verklin, the chief executive of Carat in New

York, points out that Pfizer isn’t an isolated victory. ’This brings new

business we’ve won in the last 30 days or so to dollars 400 million. To

make the top ten within 27 months of launching here is pretty exciting -

and we’re poised for more explosive growth. The perception of media

independents really has started to change though. To be Churchillian,

I’d have to say that we’re still at the beginning of the beginning.’



Verklin concedes that true independents like Carat will not stand the US

media world on its head, as they did in Europe. But he believes that

Carat’s arrival in the US accelerated the move to standalone media

operations at the big agency groups. He adds: ’We have incredible

respect for the competition among media units created by the agencies

but the market is worth dollars 185 billion here and the biggest buyer

currently is Western with dollars 4 billion or a 2.5 per cent share.

Compare that with France, where Carat’s share is 25 per cent or the UK

where it’s 22 per cent. There is plenty of room to grow.’



But some commentators are sceptical about the importance of the Pfizer

decision. They argue, for instance, that it isn’t a very sophisticated

advertiser - it doesn’t employ a single in-house media executive. For

John Perriss, the chairman of Zenith Media Worldwide, the Pfizer

appointment is no great watershed. It’s merely more evidence of a trend

that started four years ago.



He comments: ’When we launched in the States, unbundling was just

getting under way and we went there with the view that it would

accelerate. It did - due to P&G. Chief executives of the big

corporations in the US have started to look at what P&G has done and ask

whether they should be doing it too. US agency groups have reacted

quickly. Before P&G’s consolidation they had viewed all of this as a

European aberration and in Europe they have paid for it by losing

business. But in the US, a number of factors - not least our arrival -

have made them wake up.’



But Perriss obviously welcomes the fact that more big advertisers are

now considering media companies not linked to their creative

rosters.



That has to be encouraging. Chris Ingram, the chairman of Tempus,

agrees: ’This Carat win is good news for media independents. It’s good

news for the sector. It was clear by the pitch-list that Pfizer very

clearly wanted a true media independent to handle its business.



’Clients in the US are pretty conservative. That’s why media department

spin-offs have been doing well - it’s the safer route.



But with big clients, media has been the last thing to consolidate and

they’ve now had the opportunity to see what’s happened in Europe.

Rightly or wrongly, they see it as more advanced. This has always been

client-driven - the big agency groups didn’t choose to spin off their

media departments in the first place, did they?’



Paul Woolmington, the New York-based chief executive of the Young &

Rubicam-owned media specialist, the Media Edge, says that expertise, not

ownership, is the issue. He’s ready for the competition. He says:

’Consolidation of media accounts will continue and the people who win

will be those who already have the structures in place. Those who keep

fudging the issue will lose out. I’m not sure you can draw any definite

conclusion from the Pfizer appointment other than that those who

dismissed Carat in the States were foolish. But we will never see the

situation in the US where true independents like Carat and CIA will take

everyone by surprise as they did in Europe. We have always been a big

media operator in the US market and we knew we wanted to do something

sooner rather than later. We have clearly acknowledged media as a

business opportunity rather than an area where we might be threatened.’



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