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Grey Loses Out As Kraft Shifts Assignments

CHICAGO-Kraft Foods cut its roster of brand agencies to five and trimmed those shops’ compensation arrangements last week as it realigned creative responsibilities on products representing more than $100 million in ad spending.
All brand advertising assignments previously with Grey Advertising, New York, were moved to three of Kraft’s five remaining global agencies. The shop loses creative work on brands for which Kraft spent approximately $65 million from January through November of 1997, according to Competitive Media Reporting figures. Grey will continue as Northfield, Ill.-based Kraft’s agency of record for spot TV and children’s media buying.
Ogilvy & Mather adds the $30 million Post adult cereals and $6.6 million Kool-Aid accounts from Grey. Young & Rubicam takes on Grey’s $8 million Minute Rice and $2 million Baker’s chocolate accounts. Foote, Cone & Belding takes on the $17 million Stove Top stuffing brand from Grey.
Other shifts, which Kraft said continue its efforts to combine brands within each category at one shop, include the move of Light ‘n Lively cottage cheese from Y&R to J. Walter Thompson. The $9 million Good Seasons salad dressing account was sent from JWT to Leo Burnett, which in turn lost the $16 million DiGiorno Italian line to FCB.
While doling out increased work to its five shops, Kraft also took something back, saying it will no longer pay its agencies commissions on “nonworking media” such as advertising production, talent and residuals.
The traditional agency markup on production costs has been 17.65 percent. The policy change will provide what a Kraft representative called “significant” savings for the company, allowing for more media spending on core brands. “[The agencies] will come out ahead financially,” given the expanded work, said the Kraft representative.