Economy Stirs Surge of New Reviews

NEW YORK Last week brought revelations of a rush of new-business activity, beginning with confirmation that Nestle is looking to shift its $35 million Stouffer’s Red Box business and news of a $140 million Subaru review. On Friday came word that Heinz is seeking a new home for $15 million in frozen-foods business. And that’s just the half of it.

In all, it was learned last week that 10 brands representing nearly $400 million in spending-in categories ranging from retail and packaged goods to financial services and automotive-are launching reviews.

That follows $35 million in business kicked up two weeks ago, when Georgia-Pacific said it is reviewing its Brawny and Vanity Fair paper napkin brands, now at Fallon, and Cadbury Schweppes invited two nonroster shops to pitch creative ideas on 7Up, handled by Young & Rubicam. Another $180 million will likely be on tap in the next two weeks, with the expected release of the U.S. Army’s overdue RFP.

It’s turning into a feverish spring for new-business opportunities, and depending on whom you ask, the flurry is a sign of client optimism about the economy or the influence of client procurement executives. It’s probably a bit of both: After three recessionary years, marketers are turning their focus away from cost-cutting and toward revenue growth. With those efforts come shareholder expectations-marketers are passing those on to their agencies, which in turn are facing unprecedented pressure to show quick results.

“The economy is picking up,” said Arthur Anderson of Morgan Anderson Consulting in New York. “[Clients] see rewards, so they’re willing to take more risks-and an agency search is a risk.”

Industry analyst Lauren Rich Fine of Merrill Lynch also cited the economy, as well as a trend toward consolidating agency rosters. “New business is being driven by two themes: economic recovery, leading to new products and ad campaigns, and secondly, continuation of the trend of using fewer agencies.”

Factor in the growing influence of client procurement executives and you have a perfect storm of marketer unrest.

“Many clients believe that there’s a better answer out there at a lower price,” said Abe Jones, managing partner of AdMedia Partners in New York. “Agency search consultants are helping to drive the process, and there’s pressure from procurement departments who say, ‘We’re spending $100,000 on stationery and $10 million on media. Why can’t we get volume prices [for media]?’ “

Other brands that got frisky last week included Staples, which has an annual ad budget of about $70 million; $90 million client Discover Card; $15-20 million spender U.S. Bank and the Brown Co. online brokerage, at $10 million.

In confirming its creative search on Friday, Staples cited the strength of its business as a factor. “Staples is enjoying great business success, recently becoming the world’s largest office-products retailer,” the Framingham, Mass.-based retailer said in a statement. “As we look to build on our ‘easy brand’ positioning, we believe the time is right to bring in new creative thinking to help further propel our industry leadership.”

Santa Monica, Calif., consultancy Select Resources International is managing Staples’ review. Incumbent Martin/Williams in Minneapolis, an Omnicom shop, is not defending.

Late last week, Heinz began contacting shops about creative duties on its Smart Ones, Ore-Ida and Bagel Bites brands, formerly at DDB in San Francisco, sources said. In a preliminary request for information, the Pittsburgh-based company hinted at a further consolidation of its portfolio, including Ketchup and Classico sauces, at a single agency.

Roth Associates has issued a “preliminary fact sheet” on Heinz’s behalf. The New York consultancy did not return calls. Spending on all Heinz products has dropped significantly in the past four years, from a high of nearly $70 million in 2000 to about $40 million in 2002 and down to $15 million last year, according to TNS Media Intelligence/CMR.

The RFP for the Army, now the largest government advertiser, is expected to reflect a spending hike, from $130 million to $180 million. Also expected is a longer contract term, from one year with three years of renewable options to one year with four options. Leo Burnett, the Army’s lead shop since June 2000, has had its contract extended from the end of June to the end of September.