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HISPANIC AD WORK THAT ESCAPES THE HOLDING COMPANIES

How Independent Latino Agencies Outmanuever the Giants

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NEW YORK (AdAge.com) -- As marketers increasingly review and align huge accounts at the holding-company level, they sometimes make a little-known exception and entrust their U.S. Hispanic business to fast-growing independent Latino shops instead.
Two of the more nimble independent Hispanic agencies are Lopez Negrete Communications and Zubi Advertising.

Bank of America, for instance, last year consolidated its $180 million account at Interpublic Group of Cos. after a holding-company shootout against Omnicom Group. To accommodate Bank of America's multicultural needs, Interpublic is creating a unit within Draft Worldwide under Larry Harris to handle African-American and some multicultural responsibilities. Interpublic's Asian-American agency, IW Group, sidestepped a conflict with Washington Mutual by creating a spinoff agency called Ten to handle Bank of America.

Sole survivor
But there is also a sole non-Interpublic survivor on Bank of America's roster: Lopez Negrete Communications, a 100% Hispanic-owned agency that has worked with the marketer for 11 years. Bank of America, Lopez Negrete's biggest client after Wal-Mart, will account for 17% of the agency's 2004 billings, which are up 36% from $80 million last year.

Perhaps the best example of bonding with a non-holding company agency is Zubi Advertising's eight-year relationship with its biggest client, Ford Motor Co. As WPP Group developed into Ford's global marketing partner -- and made several overtures to buy Zubi -- the family-owned Hispanic agency picked up more and more Ford work, even winning business from WPP's own Hispanic agency, Bravo Group.

"Being minority-owned is a benefit for both of us, and helps Ford fulfill minority contractor obligations," said Chief Operating Officer Joe Zubi. "Minority-owned Hispanic agencies tend to be a little more free-thinking and less constrained by profit, more able to serve clients based on their needs rather than the bottom line."

Gerry Donnelly, who retired as the Ford division's advertising director at the end of 2001, recalled conducting a review as Ford realized back in the 1990s that the Hispanic market would grow faster and faster. Zubi was selected over an attempt by WPP's J. Walter Thompson to cobble together a Hispanic capability under the name Vision Futura.

The final decision
"The final decision was that Zubi could do a better job," Mr. Donnelly said.

JWT never gave up entirely. Across town from Zubi, the agency has tried a few times to beef up its Miami office. Earlier this year, JWT's Latin American president, relocating from Mexico City, considered a move to Miami to focus more on the U.S. Hispanic market, but opted instead for Buenos Aires, Argentina, a hotbed of Spanish-speaking creative talent.

Three years ago Zubi picked up all Ford's Hispanic media buying. WPP's Bravo Group hung onto Ford's Lincoln Mercury division until late 2003, when that business switched to Zubi without a review. Jeanine White, Lincoln Mercury's multicultural marketing communications manager, said her division was able to take advantage of Zubi's existing relationship with Ford and the agency's insight into the Hispanic market.

Ford accounts for about 50% of Zubi's $145 million billings, which grew by 12% to 15% this year. Independent Hispanic shops like Zubi and Lopez Negrete have the advantage of an established relationship cemented with deep knowledge of the market and a great deal of personal attention from the agency's owner. "Half my day is somehow involved with Ford," Mr. Zubi said.

Co-existence is key
Although independent shops must occasionally feel they are living on borrowed time in an era of agency consolidation, and holding companies are chagrined when their own Hispanic shops are not considered best in class by their biggest clients, both groups must co-exist.

"When we first started to work with IPG, they went out of their way to make sure we felt part of the family," said Alex Lopez Negrete, president-CEO of Lopez Negrete Communications. "We participate in brainstorming sessions, updates and status reports."

Hispanic agencies say their aligned clients haven't pressured them to sell.

"So far from a business standpoint I don't see any downside to pitching and winning accounts in being independent," Mr. Zubi said. "If it ever made sense for us to align we would certainly look to [WPP] first."

Staying aligned
Not everyone breaks alignment. Omnicom Group-aligned PepsiCo works with Omnicom-owned Hispanic agency Dieste Harmel & Partners, Dallas. General Motors Corp. is a client with Interpublic Group of Cos.' 49%-owned Accentmarketing, Miami.

Some reshuffling did occur when HSBC moved its global account to WPP in June. Hispanic startup Ole, New York, did HSBC's first U.S. Hispanic work on a project basis this year. The bank's retail business has departed for WPP, but Ole keeps the consumer-finance portion.

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Mercedes M. Cardona contributed to this report.
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