BUDGET PICKS FREEMAN, AFTER SQUEEZING OTHERS: DESPITE PUBLIC FLAP, WINNING SHOP HAPPY WITH THE BIZ

By Published on .

and Laura Petrecca

In its selection of a new ad agency, Budget Rent A Car apparently could've used the tagline: Show us the savings.

The marketer's convoluted review ended with the $45 million account landing at Cliff Freeman & Partners, New York, after a pitch that included GSD&M, Austin, Texas; Fallon McElligott, Minneapolis; and incumbent Publicis & Hal Riney, Chicago. All believed they were the front-runner at some point near the end of the review.

Fallon, in fact, publicly said it had won the account yet pulled out in the contract-writing stage, just before Budget put out its press release naming Freeman.

MONEY A MAJOR FACTOR

While the story varied between Budget and the agencies, one element remained consistent among most contenders: Budget was putting the squeeze on compensation.

According to one agency executive, although Budget wanted a campaign up and running by August or September, its request for proposals said payment would be deferred until next year.

"We would like to partner with an agency that is willing to share in the risk. . . . We are seeking only proposals with a low fixed ceiling rate in exchange for performance incentives. Great weight for our selection of an agency will be placed on the lowest fixed ceiling rate," the executive quoted the document as saying.

Compensation definitely was the sticking point for Fallon, the agency maintained.

"The scope of services [Budget] required was broad and deep, yet the dollars they were going to deploy would've only scratched the surface," said a spokeswoman, who declined to say whether Budget's payment would have covered costs or how much of a discount Budget wanted.

WINNING BIG

Budget VP-Marketing Mike Gavelek wouldn't address agency compensation, but said one option discussed was that "if we win big, [the agency will] win big."

He said Freeman was chosen because of its creative and although Fallon was a finalist, it was never told it had won the business.

Fallon's pitch was said to have centered on consumers liking Budget's rental cars so much they didn't want to return them, a concept similar to that pitched by GSD&M, according to those familiar with the pitches. The two shops wouldn't comment on that.

Winner Freeman wasn't perturbed by the flap caused by the Fallon statement.

"We're the ones, at the end of the day, who go home with the business. We delivered sound work," said Jon Brody, exec VP-group account director.

Said agency General Manager Peter Regan: "We have worked out a compensation agreement that would be mutually beneficial."

CONTENDERS MUM

None of the contenders would address whether Budget was stringing them along until it could secure a desired price, but one executive close to the pitch said, "It certainly looks that way."

"They were just telling [the agencies] what they wanted to hear," said another agency executive who just a week ago believed his shop was in line for the account.

Incumbent Publicis & Hal Riney said money was not an issue during the year it held the Budget account. Riney was Budget's second agency since 1997, having succeeded Hill, Holliday, Connors, Cosmopulos, Boston. Hill Holliday had the account from January 1997 to August 1998.

Money was a key gripe among the competing agencies, with several saying Budget wanted too much financial commitment for the pitch, including large teams flown to Chicago. Another maintained Budget demanded a lot of spec work, requesting up to six campaigns early in the pitch.

Moreover, several agency executives said Budget seesawed on marketing issues. They said Mr. Gavelek and another marketing executive contradicted not only each other at times, but also CEO Sanford Miller, over a marketing direction for the company.

NO SOUR GRAPES

The Fallon spokeswoman said the shop wasn't speaking out because of sour grapes.

"We've lost pitches before. We know what it's like to win. We know what it's like to lose," she said.

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