Marketer Discontent Set Records in 2007

NEW YORK It felt like the year of client discontent, and now the numbers confirm it: A record $27.5 billion in business went into play in 2007, blowing away the previous record of $22 billion set in 2005. The total amount of client dollars that moved or went into review last year represents a 57 percent increase over the $17.5 billion logged in 2006, based on an Adweek analysis of accounts worth more than $20 million in billings. And the figures confirm the marketers' growing unease with their existing agency relationships as the number of clients that switched shops in 2007 was up 20 percent to 153, compared to 128 in 2006. The biggest account shift last year was the $4.5 billion Dell global marketing services review, won in December by WPP Group, which is creating a new shop specifically dedicated to the account. (The U.S. creative incumbents were independent Mother and Omnicom's DDB, while the media had been handled by DDB sibling Prometheus.) Other big clients shifting some or all of their business included Johnson & Johnson (global media, $3 billion); AT&T (media, $2.3 billion) and SprintNextel (creative, $1.2 billion).The five most active categories by ad spend were computers/software, telecommunications, packaged goods, automotive and retail.The Dell review earned the computers/software category the title of most active sector last year with $5.2 billion in business shifting or put into play, a nearly ninefold increase over 2006. In December, chip maker Intel put its estimated $300 million global media account into review. The incumbent, Interpublic's Universal McCann, is defending. The telecommunications category was next with $4.7 billion in client dollars going into play, up more than 300 percent over 2006. AT&T consolidated its $2.3 billion media account with WPP's Mediaedge:cia in October. And SprintNextel unified its business at Omnicom's Goodby, Silverstein & Partners in March, the largest creative account to move during the year. (Incumbents were sibling shop TBWA\Chiat\Day and Publicis Groupe's Publicis & Hal Riney.) Verizon Communications moved $340 million in business to McCann Erickson. And Qwest awarded its $95 million account to DraftFCB.The packaged-goods category, the third busiest sector saw $3.3 billion put into play last year, driven by Johnson & Johnson moves. By comparison, just $840 million in packaged-goods spending was put into play in 2006. J&J's $3 billion global media review accounted for most of the '07 activity. After a nearly four-month review, the client opted in July to consolidate the U.S. business with IPG's UM, the primary incumbent. Omnicom's OMD was stripped of the $300 million in U.S. business it handled for the client, although it picked up AOR duties in the Asia-Pacific region and some business in Latin America. In Europe, most of the business shifted from IPG's Initiative to Aegis Group's Carat. Separately, J&J also made some creative account shifts, assigning brands such as Band-Aid, Monistat, Reach and Splenda to new shops. Kao Brands also shifted its $150 million media planning account to IPG's Initiative.In the automotive category, some $2.6 billion in business was put into play, more than double the $1.1 billion that floated around in 2006. The biggest review in the sector, for the $800 million Hyundai/Kia media planning and buying account, was launched in October. A decision was imminent at press time, sources said. Hyundai also reviewed its creative earlier in the year, awarding it to Omnicom's Goodby, Silverstein & Partners. General Motors awarded its Buick and GMC creative accounts (with total spending of $415 million) to Publicis Groupe's Leo Burnett. Saturn's $200 million creative account went to IPG's Deutsch. And Subaru's $200 million account went to Carmichael Lynch.Of the five most active categories, only the fifth, retail, registered a year-to-year decline in movement, with $2.2 billion in business going into play last year, versus $3.2 billion in 2006, down by more than a third.Sears Holdings' $740 million media review, awarded to Havas' MPG in May, topped the list of moves in the sector. Kmart awarded its $200 creative account to DraftFCB. Best Buy's $170-200 million creative account went to BBDO. "There's a lot of disappointment" among clients, said Robert Passikoff, president of Brand Keys."Clients continue to look for fresh ideas and remain less than satisfied with the strategic partnerships and thinking that they are getting out of their agencies," said Mark Sneider, U.S. managing director at brand consultancy Reardon Smith Whittaker. In terms of dollar volume, most of the action in 2007 occurred in the media-only sector, where clients with a combined $12 billion in spending put their accounts into play. By comparison, clients moved or put into review $7 billion in media-only accounts in 2006. Creative-only accounts with total spending of $8.1 billion went into play last year. By comparison, creative-only clients shifted or reviewed $7.1 billion in business in 2006.The complexity of the media landscape drove much of this year's media review activity, as clients continued to demand more precise information about the impact of the ads they buy. They also want to know more about how their customers are using traditional and emerging media and how they are interacting with ads on various platforms. "The issues are cost-effectiveness and the ability to prove that the placement of the advertising in a given communications channel is literally engaging consumers," Passikoff said. "No one [among agencies] really does it any better than the others, but they all claim to have their secret sauce."Sneider agreed. "Not all agencies are keeping up with the growing complexity of the media landscape, even though they claim they do. Clients want them to prove out ROI and it's difficult," he said.From cars to colas, said Passikoff, branding is increasingly difficult and clients are putting more pressure on their creative shops to deliver. "It's getting harder and harder to tell many of these products apart," he said. "They aren't brands anymore, they are category placeholders. The clients look to the agencies and say, 'You're supposed to understand how to put us out in front of the customer in ways where we are more engaged than our competitors.' When that doesn't happen, they want to look around."

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Marketer Discontent Set Records in 2007

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