Mitsubishi: Sinking Fortunes And Adspend

Agencies pitching Mitsubishi Motors North America will be contesting a rapidly shrinking piece of business, sources said. And Deutsch is not likely to be among them.

The Interpublic Group shop, informed just days after client svp of marketing Ian Beavis left this month that it would have to defend its 7-year-old account, has not officially said whether it will participate in the review, but sources said it is unlikely. Mike Sheldon, managing director of Deutsch/LA in Marina del Rey, Calif., would say only, “We’ve had a wonderful relationship with Mitsubishi, but we have to figure out what’s right for us.”

What was a $260 million account a year ago is now barely $200 million and shrinking, sources said. In fact, Mitsubishi has only $20 million left to spend in its 2004 fiscal year, which ends March 31, sources said.

Sheldon said the shop has had “a couple of inquiries from other car companies.” It has also had to make a creative detour as Beavis and U.S. CEO Finnbar O’Neill demanded a shift in strategy from network TV to cable, print and online. Sources added that a barter deal negotiated before the two executives joined (and which has two years left to run) has hamstrung the client’s ability to buy media effectively. A source said Deutsch suffered three rounds of compensation cuts in the past 18 months as hundreds of dealers were consolidated into five dealer groups.

Mitsubishi declined to comment on the review or its marketing plans.

Spending was on the agenda two weeks ago when factory executives met with Mitsubishi’s National Advisory Board and National Retail Marketing Council to discuss the car maker’s sinking fortunes. At the meeting, svp of corporate planning Hiroshi Taguchi asked the retailers to evaluate the automaker’s advertising. The dealers also asked corporate executives to lobby Japan for $100 million more for network broadcast buys.

The contenders in the search, to be managed by SelectResources International, Santa Monica, Calif., may be chasing a dwindling account. “Every few months the budget gets cut some more,” said one source.

Among the shops that could pursue Mitsubishi are those that pitched Subaru or Kia or both. That list includes five Interpublic Group shops—Hill, Holliday, Connors, Cosmopulos in Boston; Foote, Cone & Belding in New York; The Martin Agency in Richmond, Va.; Campbell Mithun in Minneapolis; and former Subaru incumbent TM Advertising in Irving, Texas—as well as WPP Group’s Berlin Cameron/Red Cell in New York and MDC Partners’ Kirshenbaum Bond + Partners in New York.

Kia is still evaluating finalists KB+P, Omnicom Group’s GSD&M and independents Cramer-Krasselt and davidandgoliath, the incumbent.