The value of the business that has changed hands was not disclosed, but Coca-Cola spends more than $10 million annually on Coke brand advertising in China, according to ACNielsen.
Gearing up for Olympics
Red Lounge includes members of Coke's marketing team as well as several agency partners that oversee marketing for its Coke brand and fine-tune its Olympic program. Coca-Cola is one of the global sponsors of the 2008 Olympic Games in Beijing.
Leo Burnett already handles creative for other Coca-Cola brands in China, mostly noncarbonated drinks such as Minute Maid, Modern Tea Workshop (a green tea developed by Coke especially for China), an herbal tea line called HealthWorks and the Powerade sports drink. It continues to work on those brands but not through Red Lounge. Until now, it has not worked on the Coke brand.
The agencies declined to comment, but a statement issued by Coca-Cola's headquarters for Greater China in Shanghai said Red Lounge was created to "bring together the best specialists in a single space to drive maximum integration and innovation of marketing programs for the China market. [Leo Burnett] will take the lead on client service and creative management in the Red Lounge, with 35 new Leo Burnett employees sourced from all over the world for various roles."
Two of the new staffers are Red Lounge Managing Director Wasim Basir and Chief Creative Officer Bere Mitchell, who together led McCann Erickson's Coca-Cola account team in China -- Mr. Basir was account director and Mr. Mitchell served as executive creative director. The executives are now employees of Publicis Groupe's Leo Burnett division.
McCann's role unclear
"They have previously played key roles on the Coca-Cola account and remain in key management roles in the new offering," said the Coke statement. While McCann Erickson is no longer handling creative for Coke advertising, "McCann WorldGroup will also play a role in the Red Lounge which will be finalized shortly." McCann is part of Interpublic Group of Cos.
Other agencies taking part in Coke's Red Lounge project include Publicis-owned Starcom, which will take the lead role on media strategy and planning, and Aegis Group's interactive division in China, Wwwins. Heartland, an independent outdoor-media company, will also be involved in Red Lounge.
The decision to remove McCann from Coke brand advertising in China coincides with the departure of Ilan Sobel, Coke's Shanghai-based VP-general manager, strategic marketing and innovation for China, who is returning to South Africa for personal reasons. His replacement has not been named.