DDB absorbs the toy business from its Griffin Bacal unit, as well as rival agencies Grey Worldwide and Rotter Kantor, both New York. Griffin Bacal and Grey will both retain the board-game accounts they currently handle. Jordan McGrath Case & Partners/Euro RSCG, New York, which only works on board games, is not affected by the shift.
Rotter Kantor handled only a small portion of Hasbro's products, such as its OddzOn division, which handles Nerf and Koosh. Grey loses the marquee toy products such as Batman and Star Wars to DDB, but retains board games, especially My First Games preschool products such as Candyland and Chutes and Ladders. Griffin Bacal handled products such as GI Joe and Tonka, now at DDB.
The directive for the consolidation came from Brian Goldner, president of Hasbro's U.S. toy group. Mr. Goldner also considered going outside the company's roster shops, recently contacting his former employer, J. Walter Thompson USA, about possibly pitching the account. Mr. Goldner previously was a management director at JWT, Chicago. However, soon after that contact was made, Mr. Goldner decided to tap DDB.
One executive close to the review said Mr. Goldner is set on shaking up the toy division. The executive added that through the review, Mr. Goldner not only sought breakthrough creative, but he also wanted to drive down commercial-production costs-asking agencies to keep the expenditure around $80,000 per commercial, well below the industry average of $343,000 for a 30-second spot. However, production costs for toy products do tend to be significantly lower than other industries, hovering around the $150,000 arena, said another executive, because of shorter flights and simpler concepts. The consolidation at DDB, along with the production-cost cuts, are designed to boost Hasbro's bottom line, the executive said.
TOUGH FINANCIAL TIMES
Hasbro spent $194 million on its total ad efforts last year, according to Competitive Media Reporting; $85 million of that went toward board games. Spending on its toy group varies from year to year depending on ad support behind specific brands. Many of Hasbro's licensed products-such as Star Wars, Batman or Pokemon-are dependent upon the release dates and success of related films and TV shows.
Hasbro executives didn't return calls seeking comment last week. Earlier this month, a Hasbro spokesman acknowledged that "Brian Goldner is looking at the agency situation."
The move comes as Hasbro, the No. 2 toy company behind Mattel, faces tough financial times. Last month, the company said its earnings in the third and fourth fiscal quarters would be lower than expected. In its third quarter ended Oct. 1, earnings were $13.8 million, compared with $85 million in 1999. Net revenues for the third quarter decreased 2% to $1.07 billion from $1.09 billion in the third quarter 1999.
The recent agency evaluation follows a number of top management changes. In April, Hasbro's president-CEO Herb Baum resigned to take the chairman-CEO post at Dial Co. His post was filled by Alfred Verrecchia. Mr. Verrecchia previously was exec VP-chief financial officer. In addition to the promotions of Mr. Verrecchia and Mr. Goldner, George Volanakis in August took over responsibilities for the U.S. and international toy groups as exec VP.