Whether a formal review is launched or agency of record assignments are simply issued, industry observers predict Pfizer's media agency, Carat North America, New York, is likely to emerge with most or all of the combined $738 million planning and buying account.
Carat, many believe, would trump MindShare -- the combined media operations of J. Walter Thompson Co. and Ogilvy & Mather -- and Bates USA, all New York, for the prized account. Warner-Lambert's media buying recently shifted to the newly formed MindShare from JWT, while its planning duties are split along product lines between JWT and Bates, based on creative assignments.
Pfizer spent $304.4 million in measured media last year, according to Competitive Media Reporting, while Warner-Lambert ponied up $433.6 million. According to Advertising Age's ranking of top U.S. advertisers, the merged company would rank behind General Motors Corp., Procter & Gamble Co. and Philip Morris Cos.
THE CLOUT FACTOR
Industry executives said the combined company, to be known as Pfizer, is likely to merge the two companies' media accounts under one roof for reasons ranging from maximizing clout to cost and communications efficiencies.
Carat, MindShare and Bates executives all declined comment.
"Logically, if you take a look at this thing, the chances of it staying split are very remote," said an executive close to the situation.
However, some industry observers said, the new Pfizer could house its direct-to-consumer pharmaceuticals assignments -- such as Pfizer's Viagra and Warner-Lambert's Lipitor -- at Carat and place its consumer products brands -- such as Warner-Lambert's Listerine and Pfizer's Plax -- at MindShare. Such an arrangement would leave Bates, which handles planning for products from Lipitor to Certs, out in the cold.
"There's an outside shot that a portion of the consumer end will wind up [at MindShare]," said a media executive who has worked with Pfizer. He and others said that seems unlikely.
Industry insiders said Pfizer has not contacted Carat or MindShare about handling its whole account yet, nor has it given signals about what will happen once the merger closes, expected by late May. That makes sense since such a move could run afoul of regulators, given that the two companies must stay separate until the merger becomes official.
PFIZER CALLS SHOTS
"We have to operate as two companies until the merger closes," a Pfizer spokesman said. "So we're certainly taking a look at those things, but no decisions have been made yet."
A Warner-Lambert spokeswoman referred calls to Pfizer, whose executives are expected to call the shots in the media decision. Pfizer is technically buying Warner-Lambert in the $105 billion-plus transaction.
"It's up to Pfizer," she said.
With the upfront TV buying season already under way and expected to run through late June, the new company might feel pressure to assign one agency the whole account quickly post-merger in order to maximize purchasing power.
However, others caution that choosing a media agency might be far down the to-do list for the new company, and a decision is more likely after the two companies reorganize operations internally.
"This is a multibillion-dollar acquisition and in the big scheme of things where does media fit on the ladder?" an executive close to the situation asked. "I would only guess that in the scope of what has to be [brought] together or broken apart, media doesn't fall at the top."
But sooner or later, the selection of one media shop is likely. Even if the new Pfizer does not move quickly enough to do it before the 2000 upfront market, the company is expected to maximize purchasing power by placing all its estimated $738 million in the hands of one shop.
"It's a commodity marketplace," an industry insider said. "The more you buy, the better your price."
A single media agency could also provide cost efficiencies. Pfizer has said it expects to save $1.6 billion over a three-year period as a result of the merger. Combining media duties no doubt would save only a small amount of those dollars, but could help nonetheless.
Also, one shop could simplify things for executives who communicate with the agency. They would "know whom to call when there's a problem," an industry insider said.
One factor that could have an impact on which agency is chosen is the structure of the new Pfizer's media department. The roles given to Donna Campanella, who heads Pfizer's DTC media as director-customer advocacy administration, and Dave Dobbins, senior media manager overseeing the OTC operations, as well as Kaki Hinton, Warner-Lambert's director of advertising services, could affect the process. A Pfizer spokesman said those decisions haven't been made.
Pfizer has said the new company will have four main operating units: Pfizer Pharmaceuticals Group, Warner-Lambert Consumer Division, Pfizer Animal Health Group and Pfizer Global Research & Development.
The fact that the bulk of Warner-Lambert's consumer products, such as Schick and Dentyne, fall within a division headed by Morgan Morton, Warner-Lambert's senior VP and president of its consumer healthcare operations, raises the possibility that media responsibilities for that unit could remain at MindShare and Bates, whose personnel know those businesses.
Still, with Pfizer leading the merger, Carat is expected to have the advantage once the new company looks to combine its media operations. Industry insiders said Pfizer is pleased with the work Carat has done since the drug giant consolidated its account there early last year.
Since Pfizer moved to consolidate only a year ago, partly to achieve cost efficiencies, it's likely that the Pfizer/Warner-Lambert account will be housed in one shop, industry insiders said.
Carat won all Pfizer buying and planning in late 1998. Before that, R.J. Palmer Inc., New York, handled buying and planning for over-the-counter products; Paragon Media, New York, had direct-to-consumer planning and print buying; and Campbell Mithun Esty, Minneapolis, handled DTC broadcast buying.
Pfizer was impressed by Carat's research abilities and techniques during the review, more than the buying muscle the consolidation could bring, an executive familiar with the review said.
"Basically, they got sold on the research," the executive said.
Media vendors in the print and TV field are waiting eagerly to see what happens once the merger comes down (Warner-Lambert shareholders are expected to approve the deal May 12; Pfizer's already have) since the two companies have different media cultures. Pfizer, which has become a much larger media player since 1997 when DTC TV advertising blossomed, is said to be more aggressive, while one print executive described Warner-Lambert as "a little more traditional."