Sears and its agencies still have not reached any accords in a review of compensation on the retailers' giant account, a review that began after an intensive creative shootout this spring for the apparel business and that was supposed to end by Sept. 1.
The two sides apparently remain about as far apart as client and agency counterparts can get.
Insiders characterize some Morgan, Anderson demands as 'unrealistic' and 'absurd,' in asking Ogilvy & Mather/Chicago; Young & Rubicam/N.Y.; Focus Media/L.A., and Sears' other agencies to eliminate things such as employee benefits, vacation time, and bonuses along with other overhead out of the fee system paid by Sears for their work. These are things the agencies say are normal business costs that could not be taken out if the client expects the high-level attention it receives from an agency.
Sears spent roughly $350 million in media on the Merchandise Group alone last year.
'It's a taffy pull,' said one Sears agency source. '(Morgan, Anderson) puts every agency up to a specific formula they have worked out based on the information they have collected. Right now, we're just going back and forth on the fairness of the formula.'
More than one source said that Morgan, Anderson wants the agencies to reduce the average fee rate in some cases between 30-40%, figures agencies say they would have trouble meeting without sacrificing service.
Morgan, Anderson officials could not be reached on Friday.
The new target date for the completion of the compensation review is the end of September, but some agency insiders doubt agreements will be reached by then.
Sears, about to break new apparel ads themed 'The Softer Side of Sears,' apparently has been the stabilizer in the negotiating process, occasionally cooling off both sides in what some say have been some heated negotiations.
'Sears is perhaps the source of reason in all of this,' said one agency source. 'There is some indication that Sears may get (Morgan, Anderson) to modify some of these demands.'
Copyright Adweek L.P. (1993)