That's because the executives didn't invite Cordiant Communi-cations Group's Bates Worldwide, which was ambushed by the review. Hyundai is one of Bates' largest global clients. Bates USA West, Irvine, Calif., has had Hyundai Motor America's estimated $230 million national and regional dealer creative and media accounts since 1985, when it entered the U.S. market. Its Diamond Bates, Seoul, handles the $62.5 million South Korean media account. Bates Worldwide's Atlas, London, handles Hyundai's $50 million European business. Omnicom Group's OMD handles buying for Kia's $130 million national U.S. media account. Hyundai's regional dealer account is not believed to be part of the review.
The media review, which is expected to lead to a global consolidation that could expand to creative, is believed to have been orchestrated from South Korea in what two executives close to the client contend is a move to control from Seoul the client's biggest media market, the U.S. They claim the action is a demonstration of the Korean company's older executives style of management. The two executives, who asked not to be named, said even the U.S. executives at the carmaker were shocked when they learned several weeks ago the review, which Korean executives drew up a blueprint for at least six months ago, was on a fast track.
"This is management by surprise," said one of the executives. Korean executives have tried to combine back-shop operations in the U.S. The executive said the U.S. arms of the two brands refused to meet together when the Koreans recently tried to marry the two brand's U.S. port and transport operations.
The move comes as both Hyundai and Kia continue to post breath-taking rises in U.S. vehicle sales. Bates USA West survived the client's dark days from 1989 until 1999, when the sales' escalation began. Tom O'Brien, chairman of the dealer council, rated Bates a 9.5 out of a possible 10 for its creative and media buying. "They do an excellent job," said the Quincy, Mass., dealer.
The second executive said "the U.S. arms [of Hyundai and Kia] are befuddled-why now, when things are going so good? Why disrupt it now?"
U.S. executives from Hyundai and Kia didn't return numerous calls last week. Spokesmen for both brands said they weren't aware of any review.
Bates' executives were under orders not to comment from Bill Whitehead, CEO of North America and Asia-Pacific. He declined comment.
Aegis Group's Carat USA is said to be the lead contender, mainly because it proposed aggressive low first-year fees, the first executive said. The other agencies are Horizon Media, New York, and Tempus Group's CIA, New York, according to executives.
Carat North America's President Charlie Rutman is a key player in the review, the first executive said. Mr. Rutman, who didn't return phone calls, was the No. 2 media executive at Bates' predecessor Backer Spielvogel Bates, New York.
The consolidation move makes sound financial sense, since other carmakers have done the same thing, the two executives said. But, the second executive said, "the way they're going about this is questionable."
Contributing: Richard Linnett