|Circuit City 'believes they don't need a full-service agency,' said Doner CEO Alan Kalter.
Doner CEO Alan Kalter said the agency’s contract ended at the end of February and will not be renewed. “They believe they don’t need a full-service agency,” he said.
He added that Circuit City’s new CEO, Phil Schoonover, originally came to the retailer from competitor Best Buy, which has a significant in-house advertising agency.
“Their model is Best Buy, which Phil Schoonover came from, which doesn’t have an agency,” said Mr. Kalter. “They want us to work on projects where work would be speculative and compensation would be based upon acceptance of the spec work, and we don’t have any interest in doing that.”
Circuit City declined to comment.
The marketer is already working with Euro RSCG for a project promoting its IQ Crew, a service for to help PC owners upgrade and repair computers both in the store and, in certain markets, at home. The service is service similar to Best Buy’s Geek Squad, executives familiar with the situation said.
Mr. Kalter wouldn’t say how much the agency made in creative fees on the account, which it won in June 2004. “Circuit City is a wonderful account and we loved the work we did, but from a financial basis, it was hardly our largest account,” he said.
Moving away from AOR
A number of marketers have recently moved from an agency-of-record approach to using a stable of shops for various parts of their accounts, most notably beer marketer Anheuser-Busch and retailer Target. Others drifting away from the AOR relationship include Motorola, Coca-Cola Co. and McDonald’s Corp. Even PepsiCo, long consolidated at Omnicom Group's BBDO Worldwide, has placed some of its work to other shops of late, most recently shifting its $30 million Doritos account to BBDO sibling Goodby, Silverstein & Partners, San Francisco.
The loss was the latest for Doner, which last week pulled out of the Six Flags review. “We don’t agree with the creative direction” set by the theme park’s new management, Mr. Kalter said. Of the back-to-back partings, he said, “We have had an unfortunate rash of client replacements.” Remaining Doner accounts include Mazda, Electrolux’s Eureka brand and the Food Network.
During Circuit City’s third-quarter call with analysts Dec. 19, management said the chain improved its advertising program and added $16 million during the quarter to boost its "share of voice" during the holiday season. Analysts grilled Mr. Schoonover on relatively light same-store sales for the quarter despite the increased advertising.