LG Electronics and Bartle Bogle Hegarty have parted ways after the Korean marketer decided to make the agency pitch for each project and campaign. BBH won the creative portion of global LG brand and product business estimated at $350 million back in 2007, although LG has trimmed ad spending since then.
Seoul-based LG Electronics brought in a new CEO late last year to turn around the company that is one of the world's top manufacturers of mobile phones and flat-screen TVs, but was struggling in the crucial smartphone category. In the marketing department, Simon Kang, previously head of LG's home-entertainment business unit, replaced Dermot Boden, who was named LG's first chief marketing officer in 2007. Mr. Boden joined Citigroup in March as its chief brand officer.
The policy of requiring bids for every major project is a temporary measure during the rebuilding period, though it will remain in place until LG Electronics becomes more financially stable, said Ken Hong, director of global communications.
"I'm sure we'll go back to having an AOR down the road. Right now our No. 1 priority is to get the most for the best value. The feeling here was that it's best to open it up and let people bid for the major jobs," he said. "BBH didn't sign up for that ... they didn't feel the need to pitch more than they intended to."
"It's not like suddenly we decided to change the AOR policy; over the last few months we're moving in this direction and BBH said, 'We're not interested in working under these procedures and we'd like to suggest splitting,' and we said sure" Mr. Hong said. "It was an eight- or nine-month process."
Belt-tightening at LG means there may not be many major global marketing assignments to pitch for in the near future. Other LG agencies remain in place and don't appear to have to pitch for projects. Y&R will continue to be the agency tasked with implementing marketing strategy, working primarily with local LG subsidiaries around the world.
LG is No. 67 in Ad Age 's ranking of the top 100 global marketers, and the Korean conglomerate has been cutting its ad budget. Ad spending was down 13% in 2009, to $475 million, from $546 million the previous year.
"We weren't really aligned with some of the new policies and ways of working," Arto Hampartsoumian, CEO of BBH China, the lead office on the global account, told Ad Age in an email.
BBH's campaigns for LG Electronics included "Be an instant expert" for the Optimus One smartphone, and "Putpocket" for the Mini phone, in which someone slips the tiny new phone into the pockets of people on the street , then calls them to demonstrate its terrific reception.
Mr. Hampartsoumian said the loss won't result in any layoffs at BBH China, which also handles Diageo's Johnnie Walker, Mentos, Coca-Cola brands Sprite and Minute Maid, and Unilever's Lynx.