NEW YORK (AdAge.com) -- Johnson & Johnson might be mum on why it's reviewing its $3 billion media business, but a look at the numbers shows its current setup,
The media review has been anticipated for months since J&J closed its acquisition of Pfizer's consumer-products brands last year. J&J spent $1 billion last year on media in the U.S., according to TNS Media Intelligence data. | ALSO: Comment on this article in the 'Your Opinion' box below.
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On Friday, J&J issued a brief statement confirming it's evaluating its planning and buying business, now with Interpublic's Universal McCann and Initiative, Omnicom Group's OMD, and WPP Group's MindShare. Ad Age first reported J&J's plans back in November, but the marketer declined to confirm at the time.
The statement said the review has been called "to enhance the ability of our brands to effectively communicate and leverage investment across the rapidly changing and increasingly diverse media landscape." Press-release language aside, it's clear that J&J's media-agency trifecta isn't giving it much bang for the buck, at least in the U.S., when you compare it to at least one of its big peers that has consolidated media buying with one shop.
Ad Age estimates of U.S. media spending indicate that J&J's actual U.S. outlay last year amounted to about 95% of the spending reported by TNS, which is based on media rate cards. By contrast, rival Procter & Gamble Co.'s estimated actual U.S. media spending is only about 69% of the media spending reported by TNS.
That appears to reflect a much steeper media discount for P&G, which not only is the biggest U.S. advertiser but also consolidates all spending with one agency, Publicis Groupe's Starcom MediaVest Group. (The estimates are based on the assumptions that advertising spending in financial reports is geographically proportionate to the distribution of the companies' global business and that about 15% of reported ad spending goes to agency fees and production costs, not media.)
The media review has been anticipated for months since J&J closed its acquisition of Pfizer's consumer-products brands last year. J&J spent $1 billion last year on media in the U.S., according to TNS Media Intelligence data. (That number is $1.4 billion when the Pfizer brands acquired in December are added to the mix.) Globally, J&J reported $1.9 billion in ad spending last year, and the addition of the Pfizer brands should bring that to at least $2.3 billion.
J&J's marketing team, including Brian Perkins, VP-corporate affairs, and Kim Kadlec, VP-worldwide media, have spearheaded a significant change in media thinking in the past 18 months, as J&J exited the upfront and slashed 22% of its measured media spending last year, according to TNS. People close to the company say the marketing group has encouraged brands to shift 20% of their media budgets to nontraditional media.
Drugs and medical devices
The most marked effect has come in prescription drugs and medical devices, where most of the company's brands have eliminated or dramatically reduced direct-to-consumer media spending. The focus of prescription-drug brands appears to have shifted to digital and direct media -- much of that direct-media business is now handled by Interpublic's ID Media, New York, which a spokesman wasn't sure would be part of the review.
After acquiring the Pfizer brands in December, J&J parted with Aegis Group's Carat. Interpublic's Initiative handles most global planning and buying. But WPP Group's MindShare retained global planning assignments on the Pfizer brands, and OMD won all planning and buying duties in China last year.
While none of the agencies will want to lose this business, this is a particularly scary review for Interpublic. J&J is the holding company's second-biggest client.
The review will also include digital and multicultural planning and buying, according to a J&J spokesman.
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CLARIFICATION Above, the article states: "Interpublic's Initiative handles most global planning and buying" for Johnson & Johnson. In fact, it is not clear which agency handles most of J&J's business globally, inside or outside the U.S. Interpublic's Universal McCann and Omnicom Group's OMD handle most buying and planning in the U.S. for J&J. Initiative handles most buying in Western Europe, Africa and the Middle East. Universal McCann handles most buying in Latin America. OMD handles planning and buying in China and much of the Asia Pacific region. WPP Group's MindShare handles media planning for Pfizer consumer brands outside the U.S. acquired by J&J.