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Late-Summer Shakeups - Broadcasting & Cable

Late-Summer Shakeups

Katrina wreaks mayhem, Publicis plots strategy
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Not long after Nielsen Media Research issued an annual update of its TV universe estimates, reordering market population sizes and rankings to bring them more in line with the U.S. Census, Hurricane Katrina reordered them yet again. The storm took at least three major markets out of the equation for an undetermined period.

In the wake of Katrina, New Orleans, the No. 43 U.S. media market with an estimated 672,150 TV households, would not qualify as a Designated Market Area (DMA)—Nielsen-speak for a place for advertisers to spend money. At least two other DMAs—Mobile, Ala.-Pensacola, Fla. (ranked 63) and Biloxi-Gulfport, Miss. (ranked 158)—are essentially off the chart until the situation stabilizes. It will take months, if not years, before they regain their positions.

The short-term impact on TV, radio and print media in those markets wasn't clear at press time, but at least one major medium—direct mail—was completely displaced. By last Wednesday, the U.S. Postal Service announced it had stopped accepting standard mail or periodicals for delivery to parts of New Orleans and other key areas of southern Louisiana and Mississippi.

Because media plans tend to lag behind market developments, it may take some time before ad dollars aimed at these markets begin to choke. But it will take an even longer time before they begin to flow again.

Publicis Looks Ahead

While late August isn't known for being especially news-heavy on Madison Avenue, a series of recent moves at power­house agency Publicis Groupe signals big changes in the way advertising agencies plan, buy and even invest in media.

Agencies have been using the term “investment” to elevate the notion of media buying for some time, but at least one is taking the concept literally. As was first reported here last week, Publicis, the French agency that owns Starcom Media­Vest Group (SMG) and ZenithOptimedia Group (ZOG), formed a venture-capital unit that will make strategic investments in promising new-media technologies and platforms. The unit, which will be headed by SMG's Tim Hanlon, doesn't necessarily plan on making investments to generate a cash return. The goal is to give SMG and its clients—including Procter & Gamble, General Motors, Coca Cola, McDonald's and Kraft Foods—a stake in new-media platforms that could substantially impact their ability to advertise in the future.

It's similar to what the broadcast networks and Hollywood studios have done with TiVo Inc., making strategic investments and gaining seats on the digital video recorder company's board. The result is that TiVo has moved in an advertiser- and copyright-friendly direction and away from ad-killing technology.

Further details of the Publicis plan have not been disclosed, and insiders tell B&C that it is still being developed. It remains unclear whether Publicis will invest its own money or its clients', or whether it will raise capital from outside investors.

Perhaps it won't invest money at all. “It doesn't necessarily have to be a cash investment,” notes one executive familiar with the discussions. “There are other things an ad agency can give to new-media companies besides money.”

Publicis could offer its knowledge of the marketplace in exchange for stakes and board positions with new-media companies. That's not uncommon in the industry. Publicis Chief Innovation Officer Rishad Tobaccowala, for example, is on the board at Revenue Science, a company that develops behavioral-targeting methods for online advertisers. Carat CEO David Verklin is on the board of Invidi, a company that is developing addressable-advertising capabilities for cable TV.

A high-level change within Publicis could also have profound implications for the media. In a surprise move, Rich Hamilton has taken a leave of absence as CEO of Zenith­Optimedia Americas. What's most significant is that Publicis promoted Tim Jones to CEO of the company's U.S. operations. Because Jones had been the agency's chief strategy officer, focused on broadening the agency's view of media beyond traditional outlets, the switch indicated the shop's embrace of new media.

Lastly, in what appears to be the first official merger of assets between Publicis Groupe's two media networks, Starcom MediaVest Group last week announced that it is absorbing Yellow Pages media unit Saatchi and Saatchi Telephone Directory Advertising into its SMG Directory marketing division.

Executive Shuffle

With advertising execs returning from vacation, a handful of other major announcements are about to drop on Madison Avenue, particularly in the area of media research. Carat, whose top research job has been vacant since Joanne Burke unexpectedly resigned early this year, is believed to be making a significant announcement soon, having made an offer to the research chief at a rival media shop.

It's a wide-open job market for high-ranking research execs, with vacancies still waiting to be filled at MindShare, New York; OMD, Chicago; MPG, New York; and Universal McCann, New York.

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