An executive familiar with Bank of America's relationship with Interpublic confirmed that the marketer is reviewing its massive marketing account in part because of Interpublic's accounting problems. Interpublic has yet to report audited year-end 2004 results or any results for the first two quarters of 2005, though it expects to do so by Sept. 30.
Last week, Bank of America, which spends $1.35 billion annually in marketing, contacted Omnicom Group and WPP Group. A decision is expected in mid to late August. (A BofA spokeswoman said it remains committed to the holding-company model.) The executive said those two holding companies will be asked to submit proposals that will be benchmarked against work done by Interpublic, which will defend the business. The executive also said the marketer is known to be happy with the work of the agencies. BofA is one of the few truly integrated holding-company accounts, one that Interpublic holds up as a shining example of its "virtual network" capabilities. Sixteen agencies handle creative, direct marketing, media buying and planning, experiential branding and PR.
A move out of Interpublic, which lost General Motors' $3.5 billion media-buying contract this year, would be another major blow -essentially a vote of no-confidence from an iconic corporation trying to juice up its marketing. It would also fly in the face of Interpublic's insistence that group level problems are insulated from its agencies and clients.
A swirl of confusion surrounds the account's top executive, Interpublic Exec VP-Chief Marketing Officer Bruce Nelson, who is believed to be on his way out of the company. Mr. Nelson is credited with Interpublic's successful defense of the BofA business in 2002, when it defeated Omnicom. Calls to Mr. Nelson were not returned.
A BofA spokeswoman declined to comment on whether the accounting woes were a factor, but did say Interpublic is a "strong strategic partner" and "we are pleased with the creative work that is already in the market." An Interpublic spokesman said the company is proud of the BofA work and remains "committed to the client."
TIME FOR STRENGTH
BofA, which has the most branches in the U.S., is trying to add to its might with consumers as a way to hedge against the vagaries of the commercial business. Chairman-CEO Kenneth Lewis has described his company's pending $35 billion deal for credit-card giant MBNA Corp. as a way to tap the company's deft direct-marketing skills. The spokeswoman said global CMO Cathy Bessant, who had reported to Mr. Lewis, now reports to Liam McGee, president-global consumer and small business banking, because most of the marketing spending comes from that division. Ms. Bessant remains the decision-maker on the review.
One challenge for BofA as it tries to catch Citigroup is that it's bumping up against the federal rule limiting share of deposits at 10%, which means it can't buy any more U.S. banks.
"They have to grow organically, by opening branches and stealing business, and that takes good customer service and advertising to do it," said Bob Maneri, managing director, Victory Capital Management.
contributing: lisa sanders