DETROIT (AdAge.com) -- Amid a dismal economic environment where automotive sales plunged 42% in February and shops with those accounts are busily laying off, one automotive agency looking to hire is finding few takers.
Hyundai Motor America, which has been working to start up an in-house creative agency in Irvine, Calif., is delaying the opening until May as it continues to hunt for a big-name creative chief. The shop will be called Innocean, and will be the U.S. arm of its Seoul, South Korea, agency of the same name. Hyundai and its affiliate Kia together spent some $550 million on U.S. media last year, TNS Media Intelligence reported, though Kia won't be handled by Innocean at this point. Media will remain in the hands of Interpublic Group of Cos.' Initiative.
Why some are hesitant
While it seems logical that the legions of laid off with solid automotive experience would jump at the chance to work on a juicy account like Hyundai, there are other issues at work here. Some are hesitant to join an agency in such a volatile category, particularly one owned by a foreign entity with such strong cultural values, and where there have been a string of firings of top American executives by both Hyundai and Kia in recent years. There is reluctance to commit to an single-client, in-house agency, fearing that the marketer may not be looking so much for sound opinions, but a strategy that will keep the top guy happy. And then there's some trepidation over how loyal Hyundai might be to employees, given how the marketer abruptly ended its relationship with its last agency.
Goodby, Silverstein & Partners, San Francisco, the agency tapped in spring 2007 to handle the automaker's U.S. account and credited with creating some of the most-admired work in the category these days, was summarily dismissed last fall. Joe Ewanick, the automaker's VP-marketing, gave the shop a surprisingly short nine months' notice in September. That was about four months before the agency did some highly regarded creative for Hyundai's Buyers Assurance program, which allows buyers to return their cars for up to a year after purchase if they lose their job. Goodby will officially handle the account only through the end of this month.
In the interim, the fired agency has reacted with grace. The San Francisco shop has been cooperative and quiet about its ongoing relationship with Hyundai; agency principal Jeff Goodby, in fact, didn't return calls for comment on this story.
Mr. Ewanick wasn't available for comment last week, a Hyundai spokesman said, adding the automaker is studying how to transition the account. "It's too early to comment," he said. "We don't have all the details worked out."
Hyundai wants a cohesive, consistent brand image worldwide and more control over that is coming from the brand's parent in South Korea, said Bob Cosmai, a former president-CEO of Hyundai in the U.S. He said the home office was already exerting more influence over U.S. marketing during his stint as president from 2003 to early 2006. At the time, Hyundai introduced a new global brand strategy for both that brand and Kia, along with global ad slogans for the two brands, all developed internally in Korea.
Innocean was founded in spring 2005 in Seoul and is owned by Hyundai Chairman Chung Mong-koo, along with his daughter and son. (Chairman Chung was pardoned by the Korean government last summer from a three-year prison sentence after being found guilty of embezzling $100 million from Hyundai and its subsidiaries in a high-profile corruption case).
Kia will be handled separately
Innocean is already handling Hyundai in India via its New Delhi office and is set to start work on Kia's account in Germany through a venture with Kia's U.S. agency, David and Goliath, Los Angeles, which is opening a London office for the partnership in April.
Currently, it looks as if Innocean will not handle brand sibling Kia Motors America. A Kia spokesman said, "What's going on over at Hyundai has nothing to do with us; we're two separate companies." He added that David and Goliath just inked a new three-year contract with Kia.
Ahn Byung Mo, group CEO of Kia Motors America for the past year, has a solid relationship with David and Goliath, dating from his first from his first go-round with the shop as head of Kia in the U.S. from 1999 to 2001. (David Angelo, co-founder of the independent agency, didn't return calls for comment).
No automakers in the U.S. currently have an in-house ad agency, but the practice is common for South Korea's biggest conglomerates. Samsung, for example, has in-house agency Cheil, which handles global advertising.