Tracfone Media Goes Into Play

NEW YORK Tracfone Wireless has put its media account into review, per sources. The incumbent is Aegis Group’s Carat, which is expected to defend.
 
The client spent $16 million on ads last year, per Nielsen Monitor-Plus, down from an estimated $30 million the previous year.
 
Carat won the account in mid-2006 after a review, and it was unclear why the account was going into review again now. The shop referred questions about the review to the client. Officials there could not be immediately reached.
 
Word of the review follows confirmation by Carat that it was implementing a wave of layoffs amounting to just under 10 percent of its close to 750-person U.S. staff. The cuts are supposed to be completed by the end of this week.

Last week, the shop found itself in the embarrassing position of having to apologize to its entire U.S. staff after internal draft documents on how the company planned to handle the layoffs were leaked to the press.
 
While it’s not a huge account in terms of billings, the Tracfone review follows a series of big account losses this year at Carat USA, including Hyundai/Kia, with estimated 2007 spending of $695 million, according to Nielsen Monitor-Plus (down from about $800 million in 2006); New Line Cinema ($250 million); prescription drug Spiriva ($110 million); and Jones Apparel ($30 million). The shop was also eliminated from the $145 million Wachovia review, where it was the digital incumbent.

On the plus side, Carat won Kohler in July, with estimated ad spending of $60 million. And just last week it added the global media account for Australia Tourism, with estimated ad spending of $170 million. In the U.S. that client spent $7 million on ads in 2007, per Nielsen Monitor-Plus.
 
The losses are the primary reason for the layoffs and a related $15 million restructuring charge against earnings that Aegis announced two weeks ago when it issued its first half results.
 
Tracfone is a prepaid cell phone provider in the U.S. that claims over 10 million subscribers. Founded in 1996, it is a subsidiary of Mexico’s America Movil.