Business on the Fly

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 SelectResources 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 GoodsProcter & 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.Highlights• In January, S.C. Johnson starts a rostershop 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 & BeverageEach 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. Nestlé'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."PharmaceuticalIt 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 in Santa Monica, Calif.—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.MediaStudios 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.RetailSpeciality retailers dominated—particularly Gap, with high-profile reviews in each of the past two years. Gap Inc. brands Old Navy, Banana Republic and Gap, previously in-house or with specialist shops, have all heard pitches from and given business to outside ad agencies in the past 24 months. Still, retailers' new-business activity this year was a scant 2 percent higher than 2003's $1 billion, which was more than 80 percent above the year before. Growth last year came mainly from Gap media and Kmart reviews, totaling more than $500 million. This year, Circuit City was the largest prize in play, at $150 million; Doner won that review in May. Another struggling retailer, Toys R Us, looking for a way to fight back against Wal-Mart, shifted its $130 million account to Young & Rubicam in May (media followed, going to Mediaedge:cia in October).Highlights• Drug-store chain Walgreens shifts its $60 million account to Downtown DDB in June. • Petsmart awards its business, worth $30 million, to Leo Burnett in June. • Staples moves its $80 million account to McCann Erickson in July. • In October, Pier 1 enlists Deutsch and OMD to handle creative and media, respectively, on its $60 million account.RestaurantWhat year are we in exactly? The two biggest accounts to move in the restaurant category last year were No. 1 and No. 2 on this year's list as well. Burger King, the oft-traveled fast-fooder, lasted only eight tumultuous months at Young & Rubicam before moving its $350 million account to Crispin Porter + Bogusky in January, which resulted in the subservient chicken online campaign, parodies of British sitcoms and the Burger King in bed with another man. Head-scratching creative also figured prominently in the Subway and Fallon marriage, which lasted 10 months. Impatient with work it felt wasn't what it needed, the sandwich chain relaunched its $300 million review and then stopped it abruptly, awarding the account to 2003 runner-up Goodby, Silverstein & Partners.Highlights• In February, Dallas-based independent The Richards Group parlays its retail expertise and picks up the $100 million Red Lobster business. • YUM! Brands in September awards Long John Silver's and A&W—a combined $40 million in new billings—to Omnicom creative boutique Element 79 in Chicago. • McKinney + Silver wins Rare Hospitality's $25 million business in August.TelecommunicationOne can rest assured that IPG heard Verizon Wireless this time. Having all but given up on the holding company's agencies after its relationship with Lowe soured, the cellular giant awarded McCann its $300 million account after a review. (The relationship with Lowe had deteriorated to such a degree that McCann acted as the account's steward throughout the search.) Media duties, which had not been in play, soon followed, landing at Universal McCann; the two shifts accounted for about two-thirds of this category's nearly $980 million in activity this year—down just 2 percent from 2003, when contests for Nextel, Nokia, Virgin Mobile and Boost Mobile kept category activity lively, and more than double 2002.Highlights• DDB Chicago passes on Verizon because it believes in the growth potential of Alltel. But Alltel goes into review and last month awards creative on its $100 million account to Campbell-Ewald in Detroit. • Voice over Internet Protocol (VoIP) begins to produce sizable opportunities, as Vonage awards a $75 million account to Verizon runner-up Arnold in November.Computer ProductsAnother year, another Gateway agency shift, in a category that was way down from the year before. Just 18 months after contracting with Leo Burnett, Gateway opted to review its estimated $40 million ad account (down from $150 million when Burnett won it). Even participating agencies weren't sure what they were getting into; sources said it was likely that the company would abandon brand advertising in favor of heavier placement in retailers' Sunday circulars. Overall, the category saw $600 million in account activity, down 50 percent from 2003's $1.2 billion (when Microsoft moved its $450 million direct response business). It is the second-lowest level of activity in the Top 10, above only the restaurant category, which was down more than 60 percent.Highlights• Intel becomes the latest poster child for global holding-company reviews. As new marketing chief Eric Kim prepares to join from Samsung, Intel puts its $300 million global account into review in October. The review is a pivotal one for incumbent Euro RSCG in New York. Intel is one of its top five clients.

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Business on the Fly

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