State Farm Moves Digital From Tribal DDB to Draft

Shift Leads to Cuts at Chicago Office

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CHICAGO (AdAge.com) -- State Farm has split with its primary digital agency, Omnicom Group's Tribal DDB, Chicago, in a move that could lead to cuts of as much of 25% of the agency's staff.

A Tribal DDB spokeswoman confirmed the split, but declined to offer further details.

The move figures to lead to anywhere from 10 to 20 cuts in the approximately 75-person Tribal office, as State Farm was its second-largest account, trailing only McDonald's. The agency started making cuts today. Other accounts in the Chicago office include Jones New York, Emerson Electric and Anheuser-Busch.

The account loss -- and the diminished Tribal office it leaves behind -- is likely to rekindle speculation that DDB North America may look to merge or more closely align the Chicago offices of DDB and Tribal in some fashion, something DDB Worldwide CEO Chuck Brymer is said to support. Critics of the agency contend that the siloed approach has held the core shop back in terms of digital prowess. And State Farm's shift of Tribal's account to DraftFCB, which boasts digital capabilities under the same profit-and-loss statement as creative, direct and other disciplines, suggests that they may have a point.

State Farm also works with other digital shops, including Publicis Groupe's Razorfish and Omnicom's Proximity; neither of those are expected to be impacted by the shift.

The bulk of the business leaving Tribal has shifted to DraftFCB, Chicago, which earlier this year swiped auto-insurance creative from DDB, Chicago. The auto-specific work accounted for 49% of State Farm's measured media spending last year, according to Kantar Media.

The moves come as State Farm is under pressure from big-spending auto-insurance rivals such as Geico and Progressive , which have built up significant market share. Still, State Farm has managed to grow its share lead in recent years, but analysts say its efforts to do that have worsened its underwriting results.

A State Farm spokeswoman didn't immediately respond to an inquiry. And a DraftFCB spokesman declined to comment.