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Agency reviews seen as a sign of recovery

MOVE TOWARD CONSOLIDATION

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Leslie Winthrop, CEO of agency search consultant AAR Partners, also noted the move toward agency consolidation. “Because of the economy, there is global consolidation. Where they can consolidate, it is usually much less expensive,” she said. This year, a number of large advertisers have opened reviews for both creative and media agencies. For example, last month Accenture put its estimated $40 million to $45 million advertising account into review, and Metropolitan Life Insurance Co. opened a review on its estimated $65 million creative and media account. Accenture's incumbent advertising agency is Y&R, New York. MetLife's incumbent creative agency is Y&R, New York, and its incumbent media agency is Mediaedge:cia, New York. Accenture, MetLife and Y&R all declined to comment for this story. Other recent account changes include JetBlue Airways' selection of Mullen, Boston, for both creative and media, and Omni Hotels & Resorts' choice of AvreaFoster, Dallas, as its advertising agency of record. “Our search was centered on finding the right partner to help us grow for the next 10 years,” said Marty St. George, senior VP-marketing at JetBlue Airways. Its previous creative agency was JWT and its previous media agency was Mediacom, both New York. The budget was undisclosed. “Although JWT did some great work, we felt that, being a smaller account, we might get better results with an agency that has capabilities that are more suited to our business challenges,” St. George said. Going into the review, he said, JetBlue had not determined if it wanted one agency to handle both creative and media, as well as digital. “Our goal was to find the best shop to help us achieve our business objectives,” he said. Lisa Colantuono, managing partner at AAR Partners, New York, said many clients are consolidating with one agency to gain more accountability. “When you think about procurement, clients are losing their tolerance for paying the overhead of multiple agencies,” she said. “They are trying to get everything under one roof. Because of the downturn and downsizing, the big word is accountability. The more we can save, the better.” Agencies report new business is dramatically improving this year, from new accounts as well as existing clients. “We are up about 500% this year compared to last year in terms of net revenue in new business,” said Lauren Crampsie, CMO at Ogilvy North America, New York. This year, the agency has won new clients including the American Bar Association, Bayer, Ikea and Intercontinental Hotel Group, as well as new assignments from existing clients including Cisco Systems and Siemens. “Global clients are certainly spending more, particularly in emerging markets,” Crampsie said. Earlier this month, media forecasting agency Group M revised its global ad spending projection to a 3.5% increase this year over last year, up from a December forecast of just 1.0% growth. For the U.S., Group M revised its ad spending forecast to a 1.3% decline this year, from an earlier projection of a 4.3% decline. For next year, Group M projected a 4.5% increase in global ad spending and a 2.5% increase in U.S. ad spending. “The U.S. media marketplace clearly bottomed out earlier this year, and we expect moderate growth in 2011 consistent with GDP improvement,” said Rino Scanzoni, chief investment officer at Group M. Rick Segal, worldwide president of GyroHSR, New York, said, “I would characterize the new-business pipeline as being decidedly stronger than 2009 but not quite back to the levels of 2008. We have a steady stream of new opportunities, and the size of the opportunities is larger than in 2009. Even in the worst of the recession, we had a steady stream, although they were smaller opportunities.” Segal also noted that the nature of agency-client relationships is changing. “While we are seeing some conventional AOR opportunities, what we're seeing by contrast today is larger, long-term assignments inside a multiagency, multisupplier environment,” he said. “In many cases, these are substantially larger than some of the AOR opportunities preceding the recession, but they don't come with all-encompassing, exclusive types of arrangements as the AOR.” M
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