Bailout Fallout

LOS ANGELES If there were any doubts about whether the tremors from Wall Street would spread uptown to Madison Avenue, the events of last week dispelled them.

Banking failures and buyouts involving Washington Mutual and Wachovia sparked wildly volatile developments involving five ad agencies and nearly $300 million in combined ad expenditures.

Last Monday, JPMorgan Chase stopped an old-fashioned run on Washington Mutual with a takeover. Almost immediately, the reskinning of the latter’s Web site began (branches are to follow with new signage), signaling the beginning of the end of a WaMu rebranding effort began just months ago by Omnicom Group’s TBWA\Chiat\Day, Playa del Rey, Calif., the bank’s agency of scarcely a year.

TBWA\C\D faces the prospect of losing the entire account practically overnight. The business, worth $135 million, per Nielsen Monitor-Plus, would presumably be picked up by Chase’s lead agency, independent mcgarrybowen in New York.

TBWA\C\D and WaMu executives declined comment. It was not clear if the agency is owed money for ads it already created or, if so, how much. Omnicom Media Group handles media for the client.

[“With] WaMu and Wachovia, no amount of due diligence would have protected you,” said Mike Sheldon, president of Interpublic Group’s Deutsch/LA in Marina del Rey, Calif. “How can an ad agency outsmart people who do this for a living?”

The week also left the immediate future of WaMu’s creative in question. By Wednesday night, a WaMu print ad appeared with the headline, “We love Chase. And not just because they have a trillion dollars.” According to a source, mcgarrybowen crafted the ad using the template of TBWA\C\D’s campaign.

Chase declined to address speculation that mcgarrybowen might inherit the business. Working with mcgarrybowen and other agencies, JPMorgan Chase spent $355 million on advertising in 2007, per Nielsen Monitor-Plus.

Bidding for Wachovia, meanwhile, came less than one business day after a team led by WPP Group’s Ogilvy & Mather, New York, had won a protracted review for its $145 million ad business. The uncertainty about the future of that account was compounded by the interest of not one but two suitors: Citigroup and Wells Fargo.

Citi approached Charlotte, N.C.-based Wachovia first. But by Friday, Wells Fargo said that it, not Citi, would buy the bank, with no government help. However, with its position reportedly backed by the FDIC, Citi threatened a lawsuit against Wachovia and also mulled a higher offer to purchase it.

Ogilvy, meanwhile, was left in limbo. Sources estimated its pitch might have cost the agency more than $250,000. The agency declined to comment.

The Wells Fargo offer did nothing to improve Ogilvy’s chances of keeping the business. In fact, Wells might be less committed than Citi to allowing the Wachovia brand to remain intact. As part of its initial approach, Citi suggested in a call to investors that the Wachovia brand might survive in some form because several Wachovia divisions were not part of the deal and because Wachovia’s branches outnumber Citi’s three to one. By contrast, Wells Fargo said it would buy all of Wachovia divisions.

The agency assignment will depend upon the outcome. If some divisions retain the Wachovia name — such as Wachovia Securities, which has also advertised substantially in the past — the business could conceivably be split between Ogilvy and Citi’s agency, Publicis USA. But sources indicated that even if Ogilvy were offered a consolation prize, it might not wish to become conflicted in the financial category for a smaller slice of pie.

If Wells Fargo’s offer prevails, its agency, Omnicom’s DDB L.A. in Venice, Calif., not Publicis, could be handed the new banking entity’s account. “[The agency assignment] is undetermined at this point,” said Mary Beth Navarro, a Wachovia rep.