Its Reputation on the Line, Tyco Launches 2 Reviews

In a down economy, even a client like Tyco International can find agencies eager to take on its business. But as the scandal-plagued company looks for a brand-identity shop and an ad agency to launch its first global corporate image campaign, industry experts questioned whether advertising can salvage Tyco’s tattered reputation.

Peter Ferris, client vp of marketing and public affairs, characterized the reviews as efforts to “assemble a team … that will help us unlock the strong equity within our product brands.” Sources said the client has indicated it also wants to see ideas for a corporate name change but has not yet committed to a renaming.

Ferris said he hopes to conclude both searches by late spring or summer and launch a campaign by the fourth quarter.

Tyco uses several shops to handle its business units, which include ADT security and fire-protection systems; Tyco Telecommunications, a supplier of fiber-optic cable; and U.S. Surgical, which manufactures medical instruments. The company spent $30 million on media last year, according to CMR, most of it on ads touting ADT through Doner in Southfield, Mich.

Ferris, a four-year Tyco veteran who is overseeing both searches, declined to pinpoint a budget, but sources said the campaign will be at least in the $50 million range. One source said spending could top $100 million.

Tyco’s problems are manifold, stretching back to last June, when former CEO Dennis Kozlowski was accused in an indictment of avoiding New York state sales taxes on art purchases that included works by Renoir and Monet. Kozlowski and several other former Tyco executives were subsequently indicted on charges of theft and fraud for allegedly collecting as much as $600 million in unauthorized compensation.

Two weeks ago, Tyco CEO Ed Breen dismissed Jerry Boggess, president of its fire and security services, and said the company would take a non-cash charge of at least $265 million because of problems discovered with the unit. Breen simultaneously cut earnings projections by about 15 percent, to $1.30-$1.40 per share.

In addition, the IRS is auditing Tyco’s returns from 1997-2000, and the company is dealing with Securities and Exchange Commission actions as well as class-action suits.

Analysts generally applauded the company’s decision to try to rescue its image and slumping share price ($13.30 on the NYSE on Friday, down from a 52-week high of $34.26). Industry experts, however, believe Tyco has probably absorbed too many hits in recent months to rebuild customer or investor trust anytime soon. But the account could be seen as an “intriguing creative challenge,” as one agency executive put it, noting that because Tyco’s profile is already so tarnished, an agency won’t be too badly affected if the campaign fails.

Doner and other roster shops, most of them smaller, regional players and specialty shops, are not involved in the reviews, sources said.

Two finalists in the review for a brand- identity shop emerged on Friday: Omnicom’s Interbrand and Interpublic Group’s FutureBrand, both in New York, sources said. The other contenders were New York shops Enterprise IG, an independent; Marsh & McLellan-owned Lippincott Mercer; and Omnicom’s Wolff Olins, as well as WPP’s Landor Associates in San Francisco, sources said.

The winner of that competition will help Tyco construct a new corporate image and work closely with the selected ad agency to help craft campaigns. The client has held discussions with a dozen undisclosed large shops primarily in the Northeast, and a cut to about half a dozen is expected in the next few weeks, sources said.

Tyco wants an ad agency with global capabilities and a track record of working with highly diversified companies, sources said, and experience with broad business-to-business and investor-targeted marketing is a key requirement. The campaign will be largely print-based with some broadcast in the mix, sources said.