DAVID SMITH - MEDIASMITH INC
CEO Interview - published 07/02/2004

DOCUMENT # YAM102

DAVID L. SMITH, President and Media Director of Mediasmith, Inc. in San
Francisco is a thirty-eight year veteran in the advertising media
management arena. Dave, a nationally known expert in the areas of new
media application, media strategy and media planning, has held media
management positions on both coasts. Trained in the major agency media
department environment, he has been in the independent media service
field since 1978 when he founded Mediasmith. Mediasmith is generally
regarded as the first media service in the nation to provide consulting
services and full service media management and planning in addition to
buying. His experience is broad, working with clients in categories
ranging from consumer goods to high tech and interactive, retail,
corporate and business-to-business. He is a pioneer in the use of
computers in media and in Interactive media. At Benton & Bowles he
provided input for and assisted in the development of the Donovan
system. He also participated in many of the early online media access
efforts from Marketron, IMS and Telmar. At Mediasmith he developed
Magsys, the company's proprietary media financial housekeeping system.
This software background provided the expertise that enabled him to play
an instrumental role in the development and successful market
introductions for StarSight Telecast, the first Interactive on-screen
television guide and I/PRO's I/Audit, the first published third party
Internet audience measurement. In 1995, he was credited for helping to
create an advertising marketplace on the Web through paying for links 
the media planning process. "Much of the management emphasis in media is
placed on saving money through negotiation. While I accept the value of
these efforts, attention to the planning process can often lead to
greater rewards through the execution of a superior strategy rather than
just low cost schedules. After all, you don't advertise to save money,
you advertise to make money." He has also contributed his knowledge
through articles and interviews in an extensive range of media over the
past two decades. He is a regular speaker at Industry events including
iMedia, @d:tech and others. He writes regularly for a number of industry
publications and Web sites including MSN Advantage and MediaPost's
Online Spin. He also has a major involvement in national committee work
to establish and refine standards in metrics, business practices and
financial issues for Interactive advertising with organization such as
the AAAA's, IAB, OPA and the ARF. He currently chairs the Online Media
Council for the ARF. His advisory board involvement includes MSN,
comScore/Media Metrix, Yahoo! and others. A University of Washington
graduate, Mr. Smith is married and has a twelve-year-old son; plays
guitar; and is a gourmet Chinese cook. He is an active member of the
Board of Directors for the San Francisco Boys Chorus. You'll find him at
the office early most mornings unless he is traveling with his family.

Sector - Business services

TWST: David, can you provide our readers with a brief overview of
Mediasmith and give us a picture of things as they are now?

Mr. Smith: Mediasmith is a media agency. We do media planning, media
buying, and media consulting. We work with a number of clients both on a
national and international basis. Our differentiation versus our
competitors is really one of being able to provide an all media mix with
interactive and traditional media all under the same roof with one set
of media planners.

TWST: David, your space is extremely competitive. Who are some of your
main competitors and what makes you stand out? What's the secret source
of Mediasmith?

Mr. Smith: I have said this once before at least, but I always like the
quote that Bill Graham, rest his soul, used to make about the Grateful
Dead. He said, `It's not that they're the best at what they do, they're
the only ones who do what they do.` We are, as I mentioned before,
unique in that we have integrated traditional and interactive media. So,
our competitors, as a result, come from really two areas. They come from
the traditional media agencies, most of whom are much bigger than we
are, and they come from the interactive agencies, both big and small.
There are some clients where we take on purely interactive assignments
and there are some clients where we take on the full media mix or in
some cases act as their full-service agency.

TWST: Can you give us some of the clients that you have and some of the
solutions that you are supplying for them?

Mr. Smith: One of our clients is Roxio, which makes a couple of
products, one called Easy Media Creator used to be called Easy CD
Creator. They have been the leaders in CD burning and now in DVD
burning, and really in the business of helping a consumer to manage
media files. They also have a similar product for the Macintosh called
Toast. And about a year-and-a-half ago, they bought the assets and the
technology behind Napster, and last year we introduced Napster 2.0. That
was a great challenge for us to work on repositioning something that had
previously been free to consumers and to communicate to consumers that
it was okay to pay for music. With Napster 2.0, we did interactive
media, we did guerilla marketing, we did cable television, we did
magazines, and we were really able to provide them with a full suite of
solutions. Another client that's major is Hyperion. Hyperion is in the
Business Performance Management Software business. They are competing
with a lot of big guys like Oracle, who have a fuller suite of software.
For Hyperion, we try to set them apart from the competition by seeming
bigger than life by doing foreground efforts like worldwide advertising
for them in places like The Wall Street Journal and InformationWeek to
communicate to the top management about the advantages of their software
suite. Third, that I will give you an example of, is STARZ! Ticket, who
we just started to work with in the last couple of months. It's a new
product from the Starz Encore Group and it involves a premium
subscription on the web for downloading movies on to your computer. We
are talking right now to business travelers, for instance, who might
want to download some movies before they go on a long trip. And that's
got its challenges identifying the various targets of business travelers
and then early adopters in this space, and finding ways to reach them
with what is largely a web effort at this point.

TWST: David, do you see any economic or political factors that may
affect the company being that this is an election year?

Mr. Smith: With the election year we always have the quadrennial effect,
which is that there is an abnormal amount, especially this year, of
money being put into the advertising marketplace. This is both from a
national and local election standpoint as well as an issue standpoint.
There is more money spent behind the issues these days than ever before.
This combined with the Olympics puts an irregular constriction on
inventory. The result of this, to a large degree, is relative to
television - spot television, network television - and it can drive
costs up in these arenas by 10% to 15%, 20% versus the previous year.
Every four years since the early 1970s, this effect has seen its light
in causing higher rates for mainstream television. What this means for
our clients is that we have to, more than ever before, go out and find
creative solutions in other media, whether it be interactive or guerilla
or print or cable television or others. But broadcast television is
today very much overpriced.

TWST: Did you see any significant changes or developments in the
advertising sector today?

Mr. Smith: Changes, if it's not our middle name, it's our first name.
The reality is that companies that are not embracing change are going to
get engulfed by it. We have change in so many areas. Let me give you a
few examples. The involvement of procurement people on the client side.
So you are no longer just making a deal with the marketing person or
making a deal with the marketing person as to what you are going to get
paid and then making a deal with the finance people as to when you are
going to get paid. Now, the procurement people who may or may not know a
lot about advertising or media are getting involved with the description
of the tasks that you are going to do and trying to negotiate those
costs down. So, there are tremendous cost pressures from that
standpoint. Another area has to do with planning. The clients are more
and more looking to their media partners to provide them with
communications planning. Aan example of this is the Procter & Gamble
media review that's going on right now. But in many areas, the whole
account planning function and the media planning function are getting
closer and closer together, and functions that were being held close to
the vest by traditional agencies or creative agencies are falling over
to the media agency side as the media agencies are oftentimes the
continuity or the glue on a piece of business as creative partners come
and go.

TWST: Where do you see Mediasmith being in the next three to five years?
Can you let us in on the strategic direction of the company?

Mr. Smith: As you may know, a few years ago during what we call the run-
up, Mediasmith grew quite rapidly and even opened up an office in New
York City run by Michael Drexler, who now runs Optimedia. And we were
not able to sustain that after September 11th and pulled back to our San
Francisco base. We now feel that we can operate on a national basis from
San Francisco. Communications with e-mail and video conferencing, and
other technologies as well as doing some travel has made it possible for
us to do business on a national basis, and I see that only increasing.
Historically, our base has been with technology companies and e-commerce
companies, and entertainment companies that are California based. We,
today, have clients in New York, in Connecticut, and Georgia, and other
places around the country, in a much broader group of categories and we
see that that's only going to grow.

TWST: Are you are looking to establish a presence overseas?

Mr. Smith: Not at this point. We've certainly considered it in the past
and we certainly would, in the future, should client needs be such that
we have to fill that. In San Francisco, we find ourselves much more Asia
centric than Europe centric and if we did, we would see ourselves going
in effect West rather than East as far as international expansion.

TWST: Could you give us two or three reasons why you think people should
be paying close attention to Mediasmith?

Mr. Smith: Sure. We are a private company closely held by myself and my
partner, and a few of our Board members. We have survived a very
difficult time after the bubble burst as it were, and we have come out
of the other end very strong at a time when many of our competitors did
not survive. We believe that we've got a handle through our media mix
services in being able to help clients understand how they can solve
tomorrow's problems. So, we are poised to go through a fairly
significant growth period of time and positioned to very much take
advantage of that.

TWST: David, can you give us little background on yourself and some of
the other key personnel over at Mediasmith?

Mr. Smith: Certainly. I am CEO of the company. I started this company in
1989 really as a traditional media company, but one of our first clients
was StarSight Telecast, which was one of the early leaders in
interactive television. So, we have always been involved with
interactivity in one way, shape, or form. Prior to this company, I
founded another company with the name Mediasmith in 1978. That has been
credited by Mediaweek and others as being one of the first media
consultants in the nation and one of the first agencies that approached
the media agency scenario from a media planning standpoint, not a media
buying standpoint. Prior to that, I ran a creative agency here in San
Francisco, Ted Thompson & Partners. Prior to that, I was at a company
called Honig-Cooper & Harrington, which had Levis and Clorox business
and was the biggest West Coast agency. It's the agency that Foote Cone
bought to get into San Francisco. I started my career at Benton & Bowles
in New York late 60s, working on Procter & Gamble and General Foods
business, working for people like Phil Guarascio and kind of regard this
as my MBA in media. My partner, Karen McFee, worked for many of the same
companies that I did when they had different names. I had interned at
Botsford, Constantine and McCartywhen I was in college at the University
of Washington. She in the '70s worked for Botsford Ketchum. As I
mentioned earlier, I had worked at Honig-Cooper & Harrington. She worked
for Foote Cone and we got together when I was consulting with Hawk Media
in the middle and late '80s in betweenthe two Mediasmiths, and we
started up this company in 1989, as I mentioned. A couple of other
senior people: Derek Leedy joined us in the late '90s, worked with us
for a couple of years, went out to follow the e-commerce route when the
dotcoms rose up and when that whole thing imploded came back to us, and
is today the head of our account service group. The other senior person
I would like to mention is Jinenne Miller. Jinenne worked for Lot 21
during the heyday and she joined us last year as media manager. She
oversees media planning for most of our clients as well as supervises
the interactive buying group.

TWST: David, any final thoughts, any last word you would like to leave
our readers with?

Mr. Smith: Yes.One of the models that we are trying to put forward, as I
mentioned, is that of integrated media planning - having a group of
media planners that oversee all media. That said, we have to do
something about interactive buying. The way we have approached it is to
set it up like the traditional agencies have a network buying group. So,
our interactive people are not responsible for planning although they
work hand in hand with the planners developing the media plan, but they
are responsible for understanding the sites during the negotiation and
understanding all the technologies. So, it makes us actually stronger in
interactive by separating the planning and buying, which a lot of
agencies haven't really managed to do yet having the planners in charge
of understanding the client and the media mix, and having the buyers
understand and be in charge of the negotiation, the relationships with
the sites, and the technologies. I think that is a model for the future
that we can kind of show the way for the industry.

TWST: Thank you. (JM)

DAVID L. SMITH
 President and Media Director
 Mediasmith, Inc.
 555 De Haro Street, Suite 360
 San Francisco, CA 94107
 (415) 252-9339
 (415) 252-9854 - fax
 www.mediasmithinc.com

Copyright 2004 The Wall Street Transcript Corporation
All Rights Reserved


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