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A $2.3 Billion Bombshell

Who won and who lost when AT&T consolidated its monstrous media budget.

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This month, ad-industry number crunchers will disclose how much AT&T spent on media last year, an amount that may surpass its 2006 media spending in the U.S. of $2.3 billion. The final tally will illuminate the account that AT&T awarded to Mediaedge:cia in October. That's when AT&T dropped the four other agencies that had been in its stable before it acquired BellSouth in late 2006 and phased out its Cingular Wireless brand. The aftershocks of AT&T's media consolidation (estimated to be the second biggest in history, after General Motors' shift of $3 billion to Starcom MediaVest Group in 2005) meant, for four jettisoned agencies, the sudden loss of hundreds of millions of dollars in billings.

The incumbents in the five-way fight to claim AT&T's media business:

Winner: Mediaedge:cia
New York; part of the WPP GroupBillings: $17.8 billion
Clients: Campbell Soup, Daimler, Ikea, Rémy Cointreau Group, Xerox
Aftermath: Mediaedge had held an estimated $960 million in Cingular billings before the brand was discontinued. After winning the AT&T account, it hired at least 100 staffers.

Loser: OMDWorldwide
New York; part of the Omnicom Group
Billings: $26.3 billion
Clients: Apple, FedEx, McDonald's
Aftermath: OMD lost $480 million in AT&T business—a blow softened by the agency's winning of pastamaker Barilla's global media account, worth $250 million, that same week.

Loser: Initiative
New York; part of the Interpublic Group of Companies
Billings: $11.6 billion
Clients: CBS, Home Depot, Hyundai, Molson Coors Brewing
Aftermath: Initiative had to forfeit early because sister agency McCann Worldgroup handles Verizon. It lost $135 million in AT&T billings but gained the Hyundai account in January.

Loser: Digitas
Boston; part of the Publicis Groupe
Billings: $6.3 billion (estimated)
Clients: American Express, Delta Air Lines, G.M., SABMiller
Aftermath: Digitas had handled $160 million in AT&T Wireless digital-media billings. But the agency picked up $70 million in new revenue.

Loser: GSD&M
Austin; part of the Omnicom Group
Billings: $1.8 billion
Clients: BMW, MasterCard, Southwest Airlines
Aftermath: GSD&M suffered big, losing an estimated $500 million in AT&T billings, and had to cut at least 100 staff jobs. The agency retains some of AT&T's creative business.

Sources: TNS Media Intelligence; Recma; industry sources.


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