Dozens Of Kraft’s Direct And Promo Shops Await Word On Consolidation

CHICAGO – Kraft Foods is planning a sweeping consolidation of its below-the-line marketing activities to just three or four agencies and is considering roster and non-roster shops.
A representative of Northfield, Ill.-based Kraft confirmed that the company is reviewing agencies for consumer promotion and direct marketing activities, and hopes to conclude the process next month. She declined to provide details or identify participants.
However, sources said last week the scope of the evaluation extends to all nonadvertising services, including interactive, event and trade marketing, merchandising and other activities.
Currently, according to sources, Kraft works with more than two dozen marketing agencies on a project basis. The result of the review may be to reduce that number to as few as three or four “preferred suppliers.” Miller Brewing, which like Kraft is owned by Philip Morris, last year reduced its roster of promotional agencies to two shops.
Kraft spent a total of $820 million on advertising in 1997, according to Competitive Media Reporting. Its spending on below-the-line initiatives “is at least as much” as its ad spending, according to one source. However, most of the marketing budget is funneled directly to wholesalers and retailers in the form of incentives and payments for displays and shelf space.
Sources put spending on consumer promotion alone at more than $100 million. Dollars spent on promotions are not equivalent to advertising billings. Kraft’s marketing agencies work on a fixed-fee basis.
Among the many marketing agencies that have been working with Kraft are Young & Rubicam’s Wunderman Cato Johnson, Chicago; True North-owned Market Growth Resources in Wilton, Conn.; D.L. Blair, a Garden City, N.Y.-based unit of Interpublic Group’s DraftWorldwide; and a variety of independents such as Gage Marketing in Minneapolis and Davidson Marketing in Chicago.
This review follows a consolidation in February of the creative portion of Kraft’s traditional advertising assignments among five of its agencies – Foote, Cone & Belding; Leo Burnett; J. Walter Thompson; Ogilvy & Mather; and Y&R.
Grey Advertising, which lost its creative tasks, continues to handle spot TV and children’s media buying. – with Stephanie Thompson