The partnership of the two Interpublic Group of Cos.' agencies is being called Local Com-munications Inc. and is based at McCann's office in Troy, Mich.
$400 MIL FROM GM
The driver is mutual client General Motors Corp., expected to contribute $300 million to $400 million to the venture. Other clients of the agencies, including McCann's Nestle USA and Campbell-Ewald's OfficeMax, will make up the remainder.
While almost all of McCann's and Campbell-Ewald's clients are participating in the joint venture, McCann client Unilever U.S. chose not to participate. Some other clients, including Boston Market, have yet to be folded into the venture but could be.
MORE MONEY=MORE CLOUT
"The philosophy behind the partnership, which was driven by GM, is beautifully simple," said an executive familiar with LCI. "The more money you have to spend in a local market, the more clout you have."
The genesis of the partnership
LCI wields clout in spot
INTERPUBLIC from Page 1
dates back to 1992, when the two agencies, at the behest of GM, joined together in San Francisco to purchase all of the marketer's spot TV for that market. That experiment was later extended to encompass the West Coast.
Earlier this year-at GM's urging-the joint buying effort was quietly expanded to Philadelphia, Boston, Washington, Dallas, Detroit and Houston.
ROLLOUT IN 4TH QUARTER
Now being formalized under the LCI moniker, in the fourth quarter the buying program will be rolled out to the remaining top 20 markets in the country.
Eventually, said insiders at a number of companies representing TV stations, LCI will buy for GM and other McCann/Campbell-Ewald clients in virtually every U.S. market.
A GM spokesman confirmed its participation in LCI, adding, "We plan to add additional markets gradually."
For the automaker, the full rollout of LCI is the finishing touch on a media strategy that began with the formation of GM MediaWorks in 1993. MediaWorks consolidated the auto giant's network and print media buying into a specialized unit of Interpublic.
GM'S CLOUT THEORY
Ironically, the philosophy of leveraging the spending clout of multiple clients is one GM had soured on when it decided to form MediaWorks.
"Before MediaWorks, GM used the clout theory in network buying, having agencies combining all of their clients' money in various dayparts," said one insider at a GM shop. But a problem developed when GM would demand certain discounts from the networks and other agency clients would find out about it, the insider said.
"It became a problem when agency X would ask for discount for GM and was also forced to ask for the same discount for another client who spent less than GM," said the insider. "The networks were beginning to balk."
So GM pulled its network money and formed MediaWorks.
With spot, the dynamics are different. "For local TV stations, you get better rates, better added value and better servicing the more money you give them," said the executive familiar with LCI.
LCI was the brainchild of Phil Guarascio, GM's VP-general manager, marketing and advertising, North American Operations, and his top lieutenant, Michael Browner, exec director-media operations for North American operations, say agency media executives.
"They have been very careful to make sure this was the right strategy before rolling it out," said yet another executive familiar with LCI. "They needed to prove that consolidating spot spending, and allowing the other agency clients to participate, was the way to get greater efficiencies, and they're convinced that it is."
Under lead shop McCann, LCI is shepherded by three executives: Laura Silton, McCann's senior VP-director of local broadcast, based in New York; George Hayes, McCann's Los Angeles-based exec VP in charge of AOR media accounts; and Bob Mitchell, Campbell-Ewald's exec VP-media director for Chevrolet, in Warren, Mich. Diann Secor, McCann's director of client services at its Troy office, is formally in charge of LCI on a day-to-day basis, reporting to Ms. Silton.