One of the bigger questions emerging from Procter & Gamble Co.'s $2.3 billion acquisition last week of premium pet food marketer Iams Co. was which agency ultimately will get the account.
After whittling its roster from nine to five shops during the past three years, P&G now says it isn't ruling out expanding it again--to handle Iams and sister brand Eukanuba.
Iams parted with Doner, Southfield, Mich., earlier this year and was immersed in a review set to conclude in October when P&G announced its purchase.
"The review will continue. We will participate. And we're open [to shops not on the P&G roster]," said Bruce Byrnes, president of P&G's Healthcare & Corporate New Ventures global business unit, which will manage the brands.
Iams didn't disclose the contenders, but it's said there were about eight shops on a shortlist, mainly in the Midwest and Southwest. It's also working with consultants on the review, Bob Wolf & Partners/AAR, New York, and Jane Maas, Northampton Beach, N.Y., a practice normally shunned by P&G.
Iams has been spending at the $15 million level, an amount that could balloon under P&G.
With wholesale sales of $800 million globally--nearly $600 million in the U.S.--Iams ranks between P&G brands such as Downy fabric softener and Crest toothpaste. Media spending on those brands topped $30 million and $120 million, respectively, in 1998, according to Competitive Media Reporting.
GOING OUTSIDE P&G'S ROSTER
Choosing an agency outside its roster for Iams would be highly unusual for P&G. The last time it added an outside agency was Lotas Minard Patton McIver, New York, an incumbent on cosmetic and mass-market fragrance brands it acquired in the early 1990s. That relationship ended within five years.
With Iams, though, P&G may not have many choices among current roster shops.
D'Arcy Masius Benton & Bowles, St. Louis, and Grey Advertising, Los Angeles, handle rival Mars' Whiskas and Pedigree brands, respectively. Jordan McGrath Case & Partners/EuroRSCG, New York, handles only North American business for P&G, leaving Leo Burnett Co. and Saatchi & Saatchi as its only global agencies without apparent conflicts.
Iams presents P&G with huge untapped potential for package-goods-style branding, said Jim Ebel, a former Iams marketing executive who now runs brand positioning agency CenterBrain.
"They've had package-goods people come in and out of [Iams]," Mr. Ebel said. "I was one of them. It never really was a place that . . . accepted the whole package-goods model well. Their ad spending was pretty meager in relation to a brand that size."
But an $800 million global business without supermarket or mass-merchandise distribution is "a testament to how good the quality is of those brands," Mr. Ebel added.
Iams' conservative, dog health-oriented culture prevented expansion into new areas that P&G will likely tap, he said. Mr. Byrnes and P&G Chairman-CEO Durk Jager cited opportunities to apply P&G's expertise in pharmaceuticals, haircare, dental care and human nutrition to Iams.
PaineWebber analyst Andrew Shore noted during a conference call that P&G rival Colgate-Palmolive Co. brought similar capabilities to its acquisition of the premium Hill's and Science Diet pet food brands earlier in the decade, but never substantially expanded the lines.
Copyright August 1999, Crain Communications Inc.