Accounts In Review/2

Budget: Undisclosed
Decision date: November
Incumbents: Leo Burnett and Burrell Communications, both Chicago; J. Walter Thompson, New York
Market Situation
Kellogg rules a shrinking kingdom. Its share of the $7 billion U.S. ready-to-eat cereal business was 32 percent, a good 10 points below where it was a decade ago, and still barely ahead of chief rival General Mills. Cheaper bagged cereals from Quaker Oats, Malt-O-Meal and private-label brands are also making inroads. While looking to boost sales of individual brands, Kellogg also wants to build the entire category, extending a year-old effort with ads last month themed, “A healthier life is within your reach. So tomorrow morning, help yourself.” Leo Burnett crafted both cereal-is-good-for-you campaigns, though neither has had much impact with on-the-go consumers who are apt to skip their morning meals. A category slump and two quarters of disappointing earnings have Wall Street nervous about Kellogg’s future.
Inside Scoop
Already under pressure to revive business, Kellogg president Carlos Gutierrez has a tougher job on his hands following two recent top-level resignations. Gutierrez pushed for the review as a signal of his intention to make changes. Fred Jaques, senior vice president of marketing, is managing the process with consultant Stan Beals of Jones-Lundin Associates. Six agencies and the incumbents were invited; one new shop could be added to Kellogg’s roster at the conclusion. The task has been fuzzy from the start, with participants unclear as to what prize awaits. New products? A corporate initiative? Responsibility for existing brands? All are possible, says Kellogg. Spending isn’t defined, but Gutierrez also wants to cut costs, freeing as much as $100 million more for marketing. Young & Rubicam exited the pitch, citing a conflict with Kraft. Grey Advertising, Lowe & Partners/SMS and Burrell were cut after presenting credentials.
Ammirati Puris Lintas, New York
APL is gunning full force to beef up a heavy packaged goods roster, which includes Unilever brands Ragœ and Gorton’s, as well as Sara Lee’s Ball Park franks. APL can tout brand-building credentials for the likes of Burger King, Lego toys and its more stolid client, Aetna. It needs a big account win, following the loss of Compaq and possible trouble on GM. APL honed its kids’ media planning and buying skills on Nickelodeon, which could prove a plus.

BBDO, New York
BBDO prides itself on its ability to market across age groups, a key attribute for cereal ads. The shop has picked up a string of new business, including the consolidated Frito-Lay account, a kids’ marketing initiative from Campbell Soup and branding duties for both Dell Computer and Charles Schwab. Kellogg could still join the roster and get attention.

Leo Burnett, Chicago
Burnett has the strongest position and maybe the most to lose, as it handles the bulk of the client’s $300 million-plus U.S. ad expenditures. During a nearly 50-year partnership with Kellogg, the agency has created icons Tony the Tiger and Snap! Crackle! and Pop! It won’t get dumped, but if a new shop wins any existing brands, it’s likely to come at Burnett’s expense. The agency isn’t resting on Tony’s laurels: North America president Linda Wolf has marshaled the global Kellogg account team to bring fresh ideas and strategies to the cereal business.

The Martin Agency, Richmond, Va.
A dark horse because of its relatively small size, the shop has leveraged an award-winning creative reputation into new business wins for Saab, Seiko and Timberland, among others. Martin answered a blind questionnaire and didn’t know the client’s identity until contenders were named. The agency also picks its battles carefully: It withdrew from a quick-turnaround Boston Beer review, noting it couldn’t pursue that account and service existing clients. Martin was awaiting a client briefing last week.

J. Walter Thompson, New York
Roster agency handles myriad cereals including Raisin Bran, Crispix and newcomer Smart Start, but won’t give an inch on Kellogg without a fight. Shop president Bob Jeffrey is working closely with worldwide account manager Norm MacMaster. A vacancy atop JWT’s strategic planning department could be a disadvantage. Merrill Lynch win offset lately by high-profile defections of Dell and Sprint and loss in Sony pitch.