Aegis Group's Carat North America won the assignment to handle U.S. media buying for Hyundai Motor America and sibling Kia Motors America, according to people familiar with the decision. The move was reported first on AdAge.com.
David Verklin, CEO of Carat North America, and Charlie Rutman, president of Carat USA, New York, flew to southern California last week to finalize the contract. They declined comment.
Talk swirled on the West Coast last week that the Korean parent of Hyundai Motor America is readying a creative review for the U.S. business. Stephen Kitson, international public relations manager at Hyundai Motor Co., Seoul, said in an e-mail to Ad Age: "I don't know if the creative accounts will go into review-less likely than the media buying, but always possible."
On Jan. 25, a Hyundai U.S. spokesman said he couldn't confirm or deny that Carat won the media account. He reserved comment until after the Jan. 27 meeting of the national dealers' convention in New Orleans. (See AdAge.com for the latest news.)
The media move ambushed Hyundai incumbent Cordiant Communications Group's Bates USA, New York and Irvine, Calif., which has had media and creative since the 1986 U.S. launch. However, the shift was widely expected since word of the South Korean-driven review surfaced in early December (AA, Dec. 3).
Carat was the lead contender, executives close to matter said, because it proposed aggressive, low, first-year fees. An executive close to Carat, however, said that was not the case. The other finalist was Horizon Media, New York.
Bates, which declined comment, was denied an eleventh hour attempt to pitch.
The surprising factor about the change is that it comes as both car brands are enjoying great success in the U.S. Bates survived Hyundai's lean years from the late 1980s until the mid-1990s. Hyundai's U.S. sales last year grew 42% to 346,235 vehicles. Smaller sibling Kia also has been growing since its 1994 U.S. launch.
Carat stands to win more than $500 million in buying. Hyundai's national and regional creative and buying accounts total some $350 million; Kia's national U.S. media buying, moving from Omnicom Group's OMD, is worth $130 million. Close observers expect Carat to get Hyundai's regional dealer groups' media buying, worth $60 million; Carat will have to negotiate with each of four dealer groups. Independent davidandgoliath, Los Angeles, handles Kia creative; Kia doesn't have regional dealer ad groups.
Hyundai dealers saw the media review as a power play from Korea to control operations in the U.S., the biggest market for Hyundai and Kia. They fear such a move because last time the Koreans exerted control here they say things floundered. The Hyundai U.S. spokesman said: "We went downhill [starting in the late `80s] for one primary reason: the cars weren't very good," but conceded "there were certainly other factors."
Mr. Kitson from Seoul said: "We are only doing in back-office areas what many of the top big auto groups have already done ... streamlining various shared functions to save money."
He denied reports from executives close to the marketer that the review was called by Hyundai's chairman in a rivalry with his younger brother. The chairman was said to be upset that his brother owns a stake in Diamond Bates, Hyundai's Korean agency.
contributing: richard linnett