NEW YORK: Major advertisers including Unilever, Danone and Bayer have all recently launched reviews on certain elements of their advertising accounts, but while some analysts suggest this could show signs of a recovery in the industry, others argue it is indicative of efforts among clients to cut costs.
Unilever, the FMCG giant, spends around $5 billion (€3.4bn; £3.1bn) a year on advertising, and is currently holding a high-profile reappraisal of its global media business, with WPP, Interpublic and Omnicom all participating in this process.
Bayer, the pharmaceutical firm, stated an intention to consolidate its $1bn worldwide creative and media duties in July this year, with Emirates Airlines, the air carrier, also placing its $300 million global creative brief up for grabs during the same month.
Carlsberg, the brewing giant, is also reassessing its global advertising partnerships, as is the InterContinental Hotels Group for its Crowne Plaza, Holiday Inn and Holiday Inn Express chains.
In America, General Motors, the automaker, is seeking a new lead shop for Cadillac, while Volkswagen appointed Deutsch as its main partner in the country earlier in October.
The cost of identifying and appointing a new agency can reach around $100,000 for a US-only brief, and rises to several times that figure where multinational chores are concerned, industry estimates suggest.
Russell Wohlwerth, principal of Ark Advisors, the consultancy, said "clearly we are seeing the beginnings of an ad recovery. The volume of ad reviews is way up."
However, it has also been argued that this trend is a demonstration of the fact that clients are hoping to reduce their expenditure in this area.
Coca-Cola and Procter & Gamble are among the high-profile marketers that have moved their agencies to "value-based" payment models, an approach that is predicted to become more common over time.
Dick Roth, president of Roth Associates, the consultancy, added that "big corporations want more for less and are putting pressure on agencies to cut services or cut fees to win their business."
The difficulty such a process poses to agencies was demonstrated last week, when JWT withdrew from a pitch for a $140m account for UPS.
Bob Jeffrey, ceo of the network, wrote in a memo to leading members of staff, that the review was "centered on protracted legal/contractual/financial discussions that are not in the best interests of JWT."
"In fact, the contract discussions, and terms which they are mandating, are the worst we have seen in years … These terms would seriously compromise our financial credibility with other clients if there was any inkling that we had agreed to them."
Danone, the food group, finalised the review of its $100m US media brief last week, ultimately retaining the services of MPG, part of Havas, after a four-month long assessment.
Among the challenges posed by the company in its request for proposals were asking entrants to provide "precise flexibility of budget you allow to keep these guarantees for 2010" and to "improve the level of guarantee and penalty you're willing to give to reach the financial commitment"
These types of questions are said to reflect the increasing influence of procurement departments, which now play a role in some 80% of pitches, compared with around half that number five years ago.
Joanne Davis, of Joanne Davis Consulting,
Unilever, the FMCG giant, spends around $5 billion (€3.4bn; £3.1bn) a year on advertising, and is currently holding a high-profile reappraisal of its global media business, with WPP, Interpublic and Omnicom all participating in this process.
Bayer, the pharmaceutical firm, stated an intention to consolidate its $1bn worldwide creative and media duties in July this year, with Emirates Airlines, the air carrier, also placing its $300 million global creative brief up for grabs during the same month.
Carlsberg, the brewing giant, is also reassessing its global advertising partnerships, as is the InterContinental Hotels Group for its Crowne Plaza, Holiday Inn and Holiday Inn Express chains.
In America, General Motors, the automaker, is seeking a new lead shop for Cadillac, while Volkswagen appointed Deutsch as its main partner in the country earlier in October.
The cost of identifying and appointing a new agency can reach around $100,000 for a US-only brief, and rises to several times that figure where multinational chores are concerned, industry estimates suggest.
Russell Wohlwerth, principal of Ark Advisors, the consultancy, said "clearly we are seeing the beginnings of an ad recovery. The volume of ad reviews is way up."
However, it has also been argued that this trend is a demonstration of the fact that clients are hoping to reduce their expenditure in this area.
Coca-Cola and Procter & Gamble are among the high-profile marketers that have moved their agencies to "value-based" payment models, an approach that is predicted to become more common over time.
Dick Roth, president of Roth Associates, the consultancy, added that "big corporations want more for less and are putting pressure on agencies to cut services or cut fees to win their business."
The difficulty such a process poses to agencies was demonstrated last week, when JWT withdrew from a pitch for a $140m account for UPS.
Bob Jeffrey, ceo of the network, wrote in a memo to leading members of staff, that the review was "centered on protracted legal/contractual/financial discussions that are not in the best interests of JWT."
"In fact, the contract discussions, and terms which they are mandating, are the worst we have seen in years … These terms would seriously compromise our financial credibility with other clients if there was any inkling that we had agreed to them."
Danone, the food group, finalised the review of its $100m US media brief last week, ultimately retaining the services of MPG, part of Havas, after a four-month long assessment.
Among the challenges posed by the company in its request for proposals were asking entrants to provide "precise flexibility of budget you allow to keep these guarantees for 2010" and to "improve the level of guarantee and penalty you're willing to give to reach the financial commitment"
These types of questions are said to reflect the increasing influence of procurement departments, which now play a role in some 80% of pitches, compared with around half that number five years ago.
Joanne Davis, of Joanne Davis Consulting,
Data sourced from Wall Street Journal/AdAge; additional content by Warc staff
