All eyes on Carat after big P&G win

Carat Canada’s recent win of the Procter & Gamble media buying assignment catapults it into the top tier of Canada’s media agencies, but could bring staffing and integration challenges that usually accompany an account of such size and complexity, industry experts say. “It really cements Carat’s presence in this marketplace,” said Lauren Richards, founder and […]

Carat Canada’s recent win of the Procter & Gamble media buying assignment catapults it into the top tier of Canada’s media agencies, but could bring staffing and integration challenges that usually accompany an account of such size and complexity, industry experts say.

“It really cements Carat’s presence in this marketplace,” said Lauren Richards, founder and principal of Toronto-based communications consultancy Pollin8. “P&G is very careful and thorough in how it operates, so this really establishes Carat as the agency to watch.”

Richards is very familiar with P&G from her time as CEO of Starcom MediaVest Group (SMG), which previously handled P&G’s print buying assignment and continues to share planning with Carat—primarily overseeing its beauty brands. A review of this magnitude, she said, would have been conducted with the utmost rigour and attention to detail.

While the notoriously press-shy P&G did not reveal which agencies pitched on the assignment, sources told Marketing that the shortlist was comprised of Carat, MediaCom, SMG and OMD Canada.

Some industry watchers had predicted the P&G assignment would move to SMG because of the agency’s long association with the packaged goods company and its strong reputation in the U.S.

“[The Carat win] came out of left field for a lot of people,” a longtime senior MediaCom employee turned independent consultant told Marketing. “I wouldn’t have put money on it.”

The movement of Canada’s largest advertising account – P&G spent an estimated $177.3 million, excluding digital, on measured media in 2012, according to Nielsen – represents a “seismic” shift for both the Dentsu Aegis Network Canada agency (to which Carat belongs) as well as P&G’s previous agency partner, MediaCom (which previously oversaw English TV, digital, radio and out-of-home), the consultant said.

The consultant said the loss would be acutely felt at MediaCom, which had already lost several high-profile clients in the previous 18 months. “There was a noticeable decline in a lot of big companies [on the MediaCom roster],” said the consultant, noting that most of the recent departures have been Canadian companies, such as Canadian Tire (now with Omnicom Media Group) or Canadian-only assignments like Winners/HomeSense and H&M.

Carat, meanwhile, has entered the rarified air of the truly gargantuan networks, where it now jockeys with OMD Canada for the title of biggest agency. Factoring in its 2012 win of GM Canada, Carat now handles media buying for two of the country’s top three advertisers.

Adding in its very quiet win of the $30-million Reckitt Benckiser assignment – which a source says is now housed at sister network Vizeum’s offices in midtown Toronto because of its obvious conflict with P&G – and the Target Canada assignment it picked up in 2011, Carat has become the type of media colossus nobody envisioned when it first entered the Canadian market in 1998 in Montreal and two years later in Toronto.

A former senior executive at Carat, also speaking anonymously, said the agency has done a “remarkable job” in the intervening years. “I remember a number of the established media agency [heads] at the time were saying, ‘I don’t think they’re going to make much of a difference’ because the established players were so established,” he said. “But I’m really knocked out by their success.”

Many in the industry will be watching Carat closely to see how it deals with the tricky business problems associated with such rapid growth, primarily finding the right talent to manage a best-in-class assignment like P&G. Dentsu Aegis Network Canada CEO Annette Warring declined to be interviewed for this story, telling Marketing via email that it is “too soon for us to discuss the impact on our business in relation to P&G.”

“It’s a huge challenge for agencies when managing growth, and I don’t envy them that, but I’m sure they have a great plan,” said Richards. “They’re very well-organized and very good at ensuring that clients are comforted by them being able to handle the transition well.”

The win comes with an assortment of challenges said the consultant, because P&G is a “monster” account that will require considerable effort to integrate into Carat’s existing business. It will likely require a minimum of 20 – and as many as 25 – to service the account. Gina Banks, who joined Carat as senior vice-president, business leader in 2012, would seem a good candidate to lead the P&G business. Banks spent 12 years with P&G before departing as the packaged goods giant’s global media and communications manager in 2009.

While Carat immediately becomes more attractive to prospective clients because it is perceived in the industry as a “hot” agency, the flip side is that smaller clients can become wary of no longer having the access to senior leadership and the strategic thinking they once enjoyed, and start defecting for smaller agencies.

“That’s the risk that you run when you add these big pieces of business,” said the former executive. “Big agencies tend to mean less strategic work and more tonnage buying, so there may well be shakeouts with [clients] thinking they are going to get lost. A way to stem any potential client mutiny, he said, would be for management to speak with clients individually and outline what the win means to their business.

Warring’s reluctance to speak on the record aligns both with P&G’s reputation and Warring’s reputation in the industry as a low profile – albeit highly competent and engaged – agency president. “She kind of stays out of the core media director group is my understanding,” said the consultant.

Richards said Warring has demonstrated her willingness to be open to collaboration with clients and vendors. “The power of collaboration is huge in organizations today, and… she has just a great spirit of openness and pitching in to do whatever needs to be done,” said Richards.

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