Car accounts are always among the most-prized pieces of business, so the news that two companies have put their approximately $150 million accounts up for grabs-at the same time-would usually be greeted with glee among agencies. But on this occasion, the enthusiasm of some was damped by the news that both Subaru of America and Kia Motors America have selected AAR Partners, New York, to run their pitches.
Other review consultants and agency executives believe this could cause a major conflict of interest for AAR. "I'm shocked by it all," said the head of one global network, who asked not to be named. "One company will be playing second fiddle."
Citing an apparent conflict, Russell Wohlwerth, a principal at Select Resources International, Santa Monica, Calif., said "I find it unusual that a company would conduct a review at the same time in the same category with the same search consultant." Said another search consultant: "It's unethical. It's too close for comfort."
AAR informed both carmakers about its handling the two reviews and both were fine with that, said Lisa Colantuono, partner-client services, AAR. "There is no conflict of interest," she said, because AAR signed confidentiality deals with each marketer prohibiting disclosure of confidential data about one with the other.
Several years ago, she said Leslie Winthrop, president of AAR, handled two simultaneous pitches in the same category-Nikon and Olympus America. "We don't see this as a big deal."
AAR sent Subaru's request for proposals June 10, due back June 21. At least 11 agencies made the first cut. (See AdAge.com QwikFIND aap71u)
Because the Subaru review is already under way, the question arises whether Kia might get the leftovers from Subaru's pitch. "Is AAR doing this on the cheap?" asked one executive. "Is it already surveying the market for Subaru?" A rival search consultant also pointed out that these are very similar car brands and called them "serious competitors."
But a Subaru spokeswoman said it sees no conflict with AAR's current client roster including Kia, and denied the cars are rivals. "Subaru and Kia are very different brands with very different products and customers." Less than half of 1% of Subaru customers cross-shop the Kia brand, she added. She declined to comment on whether Subaru would add media to the creative review. Interpublic Group of Cos.' Universal McCann handles media buys. Aegis' Carat USA, New York and Irvine, Calif.,handles Kia's media buys via World Marketing Group, Los Angeles.
A Kia spokesman declined to comment on AAR's potential conflict.
The two auto brands do have similarities, however. Both are moving upmarket and both want to significantly increase vehicle sales in the coming years and both pitches include more retail-oriented dealer group ad accounts. Subaru is aiming to boost U.S. sales to 250,000 units by 2006 vs. 186,500 last year and move to a premium brand with the launch of its seven-seater sport utility vehicle next year (AA, Feb. 16). Peter Butterfield, president-CEO of Kia, said in April the brand would continue its move upstream; that by year's end, its average transaction price will be higher than the nearly $20,000 it was then and well below $20,000 just a few years ago. Kia wants to increase its U.S. sales to 500,000 units by 2010 vs. 237,471 last year, according to Automotive News.
Not many agencies are equipped to handle major car accounts and the auto industry already has agency holding company conflicts, noted Jim Sanfilippo, an exec VP at auto consultancy Omnicom Group's AMCI and former VP-marketing at Kia.
Agencies are split on AAR handling both pitches. Dave Luhr, chief operating officer of independent Wieden & Kennedy, Portland, Ore., said, "If it's a conflict for us, it should be a conflict for the consultants" to have two car accounts. He said he's not interested in either review since Wieden handles Honda in Europe. Wieden lost the Subaru account in the early 1990s.
But Tom Hollerbach, president-CEO, BBDO West, said having the two reviews at AAR could be efficient and economical for both the carmakers and the agencies. "It might turn out for the better for all parties."
Consultants who missed out on the current round of auto reviews may not need fear. Talk that American Suzuki Motor Corp. may be next continues to smolder. Dentsu's Colby & Partners, Santa Monica, handles.
contributing: alice z. cuneo, laurel wentz.