Avon's calling beyond in-house

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Avon Products' latest message to the advertising industry is "Let's talk." The New York-based company has already heard creative pitches from at least one major advertising agency, according to executives close to the cosmetics marketer, which expects to spend approximately $100 million on advertising this year.

Since it parted ways with D'Arcy Masius Benton & Bowles last year, Avon has handled the creative portion of its advertising account through an in-house group. MediaVest is the media buying and planning agency on the account.

A spokesman for Avon said there was no formal review. "We continue to look for outside resources on a project-to-project basis," said the spokesman.

`NOTHING HAS CHANGED'

"I don't really want to comment," said Bob Gibralter, VP-global advertising, when asked if the company was meeting with agencies. "We're putting our heads down and doing the work. We're managing our brand equity; we're managing our creative. We're working in-house, out of house. Nothing has changed substantially since we had our reorganization."

But industry observers believe the direct marketer needs to go outside again for creative inspiration, and speculate such a move is not far off. Avon appears to be listening closely to outside opinions.

"Companies that bring advertising in-house end up talking to themselves," said Peter Flatow, president of CoKnowledge, a marketing consulting company. "They eventually have to go outside, because you just can't get the skill sets that are required to be smart in every area."

SPENDING DOUBLED

Avon CEO Andrea Jung told investors at a recent conference in New York that the company will focus its attention and resources on advertising this year. She announced a doubling of their global ad spending to $100 million.

The company's goal, according to Ms. Jung, will be to build on its brand image and to update its door-to-door sales strategy to make it more contemporary for modern women. The company also is expected to promote its latest initiative, the sale of Avon products in mall kiosks and retail stores.

For the kiosk and retail initiatives, Mr. Gibralter said, "we've done a bit of newspaper and radio testing in the past. We have some tricks up our sleeves."

Other plans include targeting teen consumers through the Internet with a new line of products. And the company will launch a new business-to-business Internet strategy for sites that sell Avon products on the Web, Ms. Jung said.

DANGERS OF GOING IT ALONE

Some observers believe that such ambitious marketing plans cannot be realized with its in-house unit alone.

"Any time you try to get outside your own lane, it's very dangerous to go it alone," said Ted Taft, VP at Meridian Consulting Group.

Avon is a recent convert to the concept of an in-house advertising unit. The account had been at N.W. Ayer & Partners, New York, since 1995. When Avon decided it needed a global marketing reach, Ayer partnered with D'Arcy and pitched for the entire creative account, which they won in August 1998. Ayer was the lead domestic agency, while D'Arcy serviced the business in 25 markets around the world.

In June 1999, as Avon's stock price dropped, the company decided to cut back on the cost of carrying two agencies. Ayer agreed to shift its Avon team and the account itself over to D'Arcy. Last August, Avon split with D'Arcy and pulled the creative in-house, along with the two agency teams that had worked on the business.

Avon's "Let's talk" campaign is the first global effort by that in-house unit. It broke in 26 markets worldwide during the first half of 2000. It plans to spend $80 million to $90 million on media worldwide, plus $20 million to $30 million for sampling and promotions.

"They made an aggressive effort to build up their internal capabilities," said a source close to the marketer. "There were some cost savings. They thus could be looking for a creative shop to augment these gains. Right now, the company is still riding on the creative work developed by Ayer and D'Arcy, and this either has already dried up or will very soon."

Ms. Jung said she expected 8% to 9% second-quarter growth.

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