NEW YORK McCann Erickson's loss of most of its Johnson & Johnson business last week is a significant blow to parent Interpublic Group—and the erosion may not be over. Interpublic's J&J losses could also spell big gains for WPP and Omnicom.
McCann, which has worked on J&J for more than a decade, lost creative duties on Band-Aid, Reach, K-Y, Monistat and Stayfree, which last year collectively spent about $100 million in the U.S., keeping only Acuvue, a global brand whose U.S. media spend is nearly $30 million. The departing brands, some of which are global, will likely be divided among three other roster shops: WPP's JWT, Omnicom's BBDO and independent Mother. J&J is still deciding where to put them, a representative said.
In addition, sources said that Alchemy, a unit of IPG's Lowe, will lose four brands with total media spending of about $100 million. The unit, which was recently folded into Lowe Healthcare, is expected to shed Splenda, Pepcid, Mylanta and Cortaid, with BDDO in line for the first brand—after a four-way pitch—and the others heading to JWT.
All told, IPG units are losing roughly $200 million in creative business, and haven't gained a single brand. In terms of revenue, the impact is not as severe—a loss of about $10-11 million, said sources—particularly in the context of a $6.1 billion holding company. What's more, other units of McCann Worldgroup, including MRM, Momentum and McCann Healthcare, continue to work on J&J. Still, the New Brunswick, N.J.-based company historically has been a top IPG client, which some see as a troubling sign for the holding company.
"Dollarwise, it's not all that significant," said Alexia Quadrani, an analyst at Bear Stearns & Co. in New York. "But having a top-five client taking business out of more than one touch point is clearly not what you want to see."
McCann's losses come four months after former New York CCO Nina DiSesa returned to the fold as worldwide cd on J&J and nine months after the agency installed a new No. 2 account leader on the business: Jonathan Goldmacher, former international new business director at Havas' Euro RSCG here. Alchemy's grip on its top client started to slip after the shift of CEO and longtime account leader Richard Pounder to an advisory role in January. That month, the New York shop lost the $3 million spending Imodium brand to sister agency Deutsch and, amid the Splenda review, its staffers became part of Lowe Healthcare.
The creative shifts come as J&J's $4 billion global media review winds down, with a decision expected by July 1. IPG agencies handle significant chunks of the business, and as such, are the most exposed. Universal McCann is lead agency in the U.S., where J&J spends about $1.4 billion annually, and Initiative handles several markets in Europe. Other contenders include Omnicom's OMD, a roster shop in China, and Aegis Group's Carat, a non-roster agency.
In contrast to IPG, WPP's JWT and Omnicom's BBDO are gaining share, despite being newcomers to J&J. Each joined the roster this year, after J&J acquired Pfizer Consumer Healthcare, for whom they both worked. In the wake of the deal, some sources wondered if they would hang on to their former Pfizer brands—including Listerine, Purell and Sudafed at JWT and Lubriderm, Rogaine and Nicotrol at BBDO—and now they're poised to take on J&J business.
Sources attributed JWT's gains to the influence of ex-Pfizer executives who've become part of J&J, as well as the shop's strong showing last year in a pitch for a key Beijing Olympics assignment in China. WPP's Ogilvy & Mather won that assignment in a five-agency battle that also involved Omnicom's TBWA, Lowe and McCann.