Dozens Of Direct, Promotional Agencies May Be Cut From Roster
DETROIT--Ford Motor Co. divisions are nearing completion of an internal review and consolidation of their below-the-line marketing vendors, requested earlier this year as part of the automaker's Ford 2000 global cost-cutting initiative.
Collectively, Ford spends hundreds of millions of dollars on such efforts each year.
"Everybody wants to get into Ford's pocketbook," said an agency source. "By consolidating, they're going to be much better able to control costs because they can negotiate more tightly with a smaller group."
Lead agencies handling the estimated $1 billion the company spends on brand and product advertising are unaffected by the consolidation, as are shops involved in ethnic and minority marketing efforts, sources said.
Each of the company's divisions or subsidiaries (Ford, Lincoln-Mercury, Ford corporate, Mazda and Jaguar) has a separate marketing budget that covers areas such as point of sale, direct mail, promotions, training, auto shows, incentive budgets and customer and dealer communications. Interactive marketing is not believed to be part of the consolidation.
Ford officials could not be reached for comment on the project.
Currently, there are several hundred specialty agencies or vendors working on marketing initiatives for the company's various divisions and subsidiaries. Each is responsible for reducing that list to between six and 12 shops, with decisions scheduled before year's end, sources said. Each also will continue to have its own list of vendors.
Richard Beattie, Mazda North American Operations president and chief executive, said the company is reviewing everything other than the factory account.
"We're in the middle of reviewing all of our submarketing supplier relationships," Beattie said, adding that the assessment affects everything from merchandising to parts accessories, "anywhere where we use vendors to help us."
Beattie supports Ford's directive. "In my opinion, we need to cut back by a reasonable amount."
Besides the initial cost savings, another reason to consolidate is the company's desire to limit the number of vendors that connect with consumers but, at the same time, are responsible for maintaining each division's brand identity, a source said.
Separately, Mitsubishi Motor Sales of America, Cypress, Calif., expects a report early next month from consultancy Select Resources International in Los Angeles with recommendations on its own below-the-line vendor review [Adweek, Sept. 28].
--with Michael McCarthy