Nabisco Foods, after an unusual and exhaustive six-month review, selected a half-dozen agencies to handle its $250 million consumer promotion business.
The six shops will share responsibility for promotion work across Nabisco's operating units, including Nabisco Biscuit Co. (cookies and crackers), LifeSavers Co. (candy, Planters) and U.S. Foods Group (Grey Poupon, A.1. steak sauce).
ROSTER THINNED FROM 15
The action winnows Nabisco's promotion roster from approximately 15 agencies.
Named were Alcone Marketing, Darien, Conn.; Carlson Droddy, Westport, Conn.; Davidson Marketing, Chicago; Paul Inc., Philadelphia; Promotion Network, Dallas; and Ryan Partnership, Westport, Conn.
The purpose of the review--dubbed a "strategic sourcing initiative"-- was to find "potential new suppliers," according to an October 6, 1998, missive Nabisco sent to its promotion shops. The letter cited wide-ranging functions included in the review: strategic planning, creative development, program development, project management execution, graphic services, event sampling, in-store promotion and trinkets/premiums.
The review was conducted by an internal committee that included Peter Klein, exec VP-strategy, business development and marketing services, and Ken Freeman, VP-corporate marketing development, analytics and marketing research.
Some agency executives involved in the review were critical of the process, not only because of its depth and duration, but also because they said the marketer appeared to be basing its decision mainly on price.
In its request for proposals, Nabisco required an excruciatingly detailed outline of agencies' capabilities and cost structure.
"They put together an analytical marketing matrix model to judge costs" that appeared to have been drafted with an accounting firm, said one executive involved with the review. "The lowest common denominator was price."
"I haven't seen a pitch like that in a long time," said another executive involved in the review. "They wanted a breakout of what it costs to write, design, produce, traffic and print each free standing insert."
At least three executives with knowledge of the review, in fact, said Nabisco picked its shortlist about a month ago but delayed doling out specific assignments until receiving detailed bids on each.
Even now, Nabisco isn't disclosing the final agencies' specific assignments.
LOOKING AT 'HOW'
"Although they do have specific assignments at this point, we're still taking a look" at how that might shift in the future, said a spokeswoman. "As they are going to be shifting around, we can't share what they are working on now."
But the company is clear in that it didn't consider price an overriding factor in its final agency choices.
"While someone could say we consolidated consumer promotion agencies so we could get a lower cost, that's a byproduct," said Rick Lenny, president of Nabisco Biscuit, one unit involved in the review. "What I want to do is ensure that we are a major player with a major promotion agency, so that we get the best people at all times."
He added, "The topspin was [how to build] the equity of our brands rather than who is going to give us the lowest cost on a sweepstakes."
Copyright April 1999, Crain Communications Inc.