Business on the Fly: Opportunities Abounded in ’04

NEW YORK Anyone. Anywhere. Anytime. That was the theme for new business in advertising this year, where few roster shops seemed safe, no matter how good their work or how deep their ties to the client.

Jump balls. Highly structured reviews led by search consultants. Surprise calls from clients looking for ideas. Billings went into play for all sorts of reasons. A lot of it: New business of all kinds totaled more than $20 billion in 2004, up more than 40 percent from $14 billion-plus in 2003 and $11 billion in recession-wracked 2002, according to Adweek reports.

Agency executives and search consultants agreed that the rapidly improving ad economy is helping to drive the pace of new business, as clients focus more on their long-term agency relationships and less on solving short-term sales crises.

“There was a lot of pent-up demand [for change]—a lot of unhappy marriages,” said Cleve Langton, corporate evp and director of business development worldwide for Omnicom Group’s DDB.

It was also undoubtedly the Year of the Car, with more than a dozen automotive accounts contested in general or roster-shop reviews. Some, like Mitsubishi, are looking for new solutions. Others, like Kia and Subaru, are looking for agencies to help reposition their brands.

But in one way or another, all of the car companies are responding to overcapacity, slowing sales and the most crowded marketplace industry players say they’ve seen. Auto marketers “are looking for whatever advantage they can get,” said Russel Wohlwerth, principal in consultancy Select Resources International in Santa Monica, Calif., which is managing Mitsubishi’s agency search. “The way you advertise a car is vastly different today than it was just a few years ago.”

Trends affecting the ad industry itself also impacted new business in 2004.

Holding-company reviews totaled $1 billion. And Procter & Gamble, responding to the need for new ways to manage and measure a fragmented media landscape, launched a $2.5 billion communications-planning review, co-won by Publicis Groupe’s MediaVest and Aegis Group’s Carat.

Packaged Goods
Procter & Gamble, absent from the review picture in ’03 (when Jergens was the largest account move) and ’02 (when Gillette shifted media), accounted for most of the packaged-goods category’s activity in ’04, with two reviews accounting for $4 billion-plus in combined billings, more than three-quarters of the sector’s $5 billion-plus in play. That amount, twice that of the next most active category, was up nearly 2,000 percent from the $265 million shifted in ’03. P&G reviewed communications planning ($2.5 billion), and interdisciplinary teams pitched ideas on in-store marketing ($1.6 billion).

Highlights
—In January, S.C. Johnson starts a roster-shop review for its $350 million global broadcast media buying biz. Six months later, it ends the search without changing its assignments, split among Initiative, Optimedia, Universal McCann and FCB.

Automotive
“We owe it to ourselves to look around” was a struggling Mitsubishi’s explanation to its dealers for its decision to review this month, says one insider. And how: Not since General Motors placed its $2 billion media planning account in review in 2000 have automakers put so much on the table. Too many models, not enough demand and cooling sales all made for an almost uninterrupted onslaught of automotive pitches in 2004: 15 in total, versus half that number last year. Volkswagen, Kia, Subaru, Mitsubishi, Jaguar and Porsche led the parade.

Highlights
—In October, Volkswagen pits its two roster shops against each other for its $1.4 billion global media business. It decides not to switch its overseas assignments, but North America remains up for grabs between Havas’ MPG and WPP’s MediaCom.

Food and Beverage
Each contender had to give 50 presentations in markets across the world. The review took eight months. One incumbent lost it all. The other two roster shops split the business, but they didn’t know how, exactly. Nestle’s $1.5 billion global review, described by contenders as “meticulous” and “thoroughly professional,” was also nerve-wracking. In the end, Publicis and WPP shops prevailed, but with Christmas only a fortnight away, the client still had not decided which markets would go to which network. No such doubt for Diet Pepsi, which gave its account to DDB in December. That decision came after the client held an all-Omnicom shootout that included 40-year incumbent BBDO and sibling TBWA\Chiat\Day.

Highlights
—PepsiCo stays inside Omnicom but goes beyond BBDO, as DDB wins the $30 million Diet Pepsi assignment.
—J. Walter Thompson wins Stouffer’s $35 million Red Box business in June.
—Citing ConAgra conflict with its agency DDB, Tyson moves its $40 million account to Havas’ Arnold in March.

Financial
“Blurred lines of competition and government scrutiny started movement in the financial-services sector in ’03,” said New York search consultant Joanne Davis. “The same is now happening with insurance companies, combined with a soft market. That category could be the next volatile one in ’05.” In 2004, notable activity in financial included a holding-company review (HSBC’s $600 million global search) and a big-account switch to a small creative boutique (mcgarrybowen wins J.P. Morgan Chase). HSBC alone accounted for nearly one-third of the sector’s $1.6 billion of business reviewed in 2004, which was up more than 50 percent over 2003, when the $400 million American Express media review led the segment.

Highlights
—J.P. Morgan enlists mcgarrybowen for creative on its $300 million account after its Bank One purchase.
—After two years with Omnicom’s GSD&M, Charles Schwab (the man and the company) shifts its $100 million account to Havas’ Euro RSCG in New York in a quest to build itself into a “hero brand.”

Pharmaceutical
It was hardly love in a tub for the incumbent agencies on two of the three erectile-dysfunction drugs, as Levitra and Viagra switched shops in a year when “the four-hour erection” became ingrained in the pop-culture consciousness. And despite controversy over creative content, the Vioxx market withdrawal and other issues, the category has gotten so big, it’s drawing attention to itself,” said Russell Wohlwerth, principal at consultancy SRI. Drug makers continued to be a fruitful source of new business. While this year’s activity level couldn’t match the 65 percent increase from 2002 to 2003, the segment did have the fourth-largest increase in activity among the Top 10 client categories.

Highlights
—McCann wins Viagra ($100 million) in February; by November, it’s taking flak for the blue-horns spot, which, among other things, didn’t mention erectile dysfunction.
—Schering-Plough awards its $90 million OTC Claritin biz to Euro RSCG in August.
—GlaxoSmithKline and Schering-Plough in November shift their $90 million erectile-dysfunction offering, Levitra, to Publicis’ Saatchi & Saatchi Consumer Healthcare.

Media
Studios made the media category lively. Paramount welcomed two new marketing execs, Steve Siskind from Fox and Gerry Rich from MGM and Miramax, and said goodbye to longtime media agency MediaVest. Miramax, having failed to achieve the “product integration” (i.e., placement deals) its marketing chief, Rick Sand, said he wanted from Publicis’ Zenith in 2003, returned to its old media agency, Palisades Media Group. But a new front opened for new-business competition. By year’s end, the country’s two largest cable companies (Time Warner and Comcast) and the two largest satellite-TV companies (DirecTV and EchoStar’s Dish Network) either had enlisted or were in the process of enlisting ad agencies to help them build brands. And Cablevision also got into the act, hiring new shops for its Voom satellite and Optimum Online products.

Highlights
—Miramax enlists Palisades Media Group for its $250 million account in May.
—Cablevision in July awards its $50 million Rainbow DBS (aka Voom) biz to Mullen.
—Paramount in October awards its $480 million media business to Mediaedge:cia.
—Time Warner Cable contracts Ogilvy in October for a $50 million assignment.