Starcom packs its bags as Telecom hands media account to new ‘data-driven hub’ Dynamo

Telecom has reorganised its agency partners into a new structure and shifted its media business from Starcom to a newly-created, Omnicom-owned ‘integrated data-driven hub’ called Dynamo that will take care of all its media planning, media buying, direct marketing planning and analytics.  

The reorganisation includes a new strategy team made up of ten key individuals from Telecom, Big Picture, Saatchi & Saatchi, Rapp Tribal and Dynamo and while Telecom chief marketing officer Jason Paris is still on leave, he did return our call and says the decision to move the media business to Dynamo is based on strategy and cost.

He praised the work of Starcom—and the smarts and character of chief executive Alistair Jamison—and says it has been a very important partner for Telecom over the years, but he says it received a proposal from Rapp Tribal, Telecom’s direct and digital agency, in October last year that offered reduced agency fees, reduced creative fees and “gave us greater buying power.”

He says it worked with Starcom for a couple of months looking at options, but the potential savings and efficiencies of the offer were too attractive. 

Losing a client the size of Telecom is obviously a big blow for Starcom, which has held the account for many years through its association with Telecom’s creative agency Saatchi & Saatchi (Publicis-owned Starcom separated from Saatchi in 2004). But Jamison told the Herald that recent account wins, including Genesis Energy, meant there wouldn’t be too many job losses.  

“Starcom has delivered great work for us for several years but our focus is now on utilising the huge opportunities that exist within our customer data and our online tools,” Paris said in a release. “We believe Dynamo will provide us with significant additional strategic and cost benefits going forward and allow us to take advantage of the growing shift to data by our customers.”

Using data more effectively in ”order to enhance its market engagement and commercial performance in an increasingly data driven environment” is a top priority for Paris—and Telecom as a whole—and while he says “it already has its own engines”, he says there’s plenty of room for improvement in that field, and the decision to apply data and analytics skills to media planning and buying tends to indicate he’s serious about it. 

“We’ve got a lot of data on our customers and probably haven’t used it as well as we could have,” he says. 

While he says there will be a big focus on direct, one to one and “trigger-based marketing” within Dynamo, he says it won’t be at the expense of mass media spending. In fact, he says the cost efficiencies of this new structure mean it might be able to invest more in mass media.  

It’s thought Dynamo, which is owned by DDB Media Holding and will be housed in the DDB Group’s building, already operates in the US market, but it has been set up to serve Telecom exclusively in New Zealand (for now at least). It’s certainly a big win for the DDB Group, but managing director Justin Mowday was a firm “no comment” on the matter. 

Last year, we heard a few whispers about some looming changes for Telecom and an apparent “workaround” that would let Omnicom’s media agencies work on the two big telco accounts in this market. Omnicom-owned SparkPHD already holds Vodafone, and it’s thought a holding company clause meant another Omnicom agency, the biggest of which is OMD, wasn’t able to hold the Telecom account at the same time. 

Kate Thomas, who was strategy director at OMD, now has the same title at Dynamo. And it’s thought some of Rapp Tribal’s senior staff will also be moving across to the new entity.

In 2011, Telecom was ninth on the Nielsen’s list of New Zealand’s top advertisers, spending around $32 million. This was slightly up on 2010, but considerably down on 2009 when it spent close to $50 million and made it to fifth. 

This decision isn’t thought to affect Telecom’s creative account, which is still held by Saatchi & Saatchi, but it certainly won’t hurt DDB’s chances if the business does go to pitch. Still, after the success of its Tommy and Boris campaign, Saatchi will be feeling pretty confident it can hold off the hoards looking to get a slice. 

The full letter of appointment was sent to media vendors on 21 December last year.  

Telecom New Zealand Limited and its Affiliates hereby appoint Dynamo Communications Limited as its preferred media agency of record. Telecom Affiliates include Gen-i, AAPT, Skinny and any holding company or subsidiary of these companies or any member of the Telecom group of companies.

This appointment is effective from 1 April 2013 unless otherwise advised. From that date Dynamo will be responsible for media placement with media vendors on behalf of Telecom and its affiliates. 

Please ensure Dynamo is informed of any confirmed media bookings on or after 1 April 2013 and these bookings are transferred to Dynamo’s account on the same price basis (without prejudice). 

The transition phase of this appointment commences from 7 January 2013. To this end, please supply Dynamo with copies of all annual contracts or other arrangements that will be in effect during all or part of 2013. 

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