Just weeks after winning the $150 million Farmers Insurance account, Omnicom's PHD has had to resign the business due to a client conflict within the holding company, Ad Age has learned.
As a result, Farmers has awarded the business to Publicis Groupe 's Zenith.
According to people familiar with the matter, PHD resigned the business after State Farm -- a much bigger client by marketing spending that is handled by PHD sibling agency OMD and Omnicom creative shop DDB -- learned about the new relationship PHD had with farmers.
Farmers Insurance spent $152 million on U.S. measured media, according to Kantar Media. State Farm, by contrast, spent $583.4 million.
It's understood that State Farm considered the win a conflict despite that fact that PHD and OMD operate as independent media agencies. However, the two shops do sit under the same umbrella group at the holding company, Omnicom Media Group, and this casualty is an example of a potential downside to such structures. While they can help bring in new business they can sometimes also cause client conflict issues.
While agencies do their darndest to navigate potential conflicts, often setting up firewalls or spinoff conflict shops, some clients are still sensitive to competing accounts within a holding company.
Interpublic Group of Cos' ran into a similar conflict in late 2011, when an IPG client asked PR firm Weber Shandwick to resign its brand new Kellogg account. After Kellogg was forced to undertake a quick and unexpected review, it hired Edelman as its PR agency.
In the case of Farmers, PHD had come out on top in a pitch in July, after a competitive review that also involved Zenith and incumbent Mindshare.
Omnicom and Farmers could not be reached for comment. PHD and State Farm declined to comment. Zenith confirmed the win but declined to comment further.