Pfizer is right RX for Carat

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In a city of trophy office views, Charlie Rutman has a vantage point of Manhattan that rivals anyone else's. But on Feb. 13, the exec VP at Carat USA appeared to be floating even higher than the buildings around him after snaring Pfizer's big prize.

"I'm on cloud nine-no, actually, I'm on cloud 10," he said between congratulatory phone calls the day after Aegis Group's Carat bested WPP Group's larger MindShare, New York, for Pfizer's estimated $700 million media buying and planning account.

For Carat, which already had Pfizer's $300 million account and now adds the $400 million in billings that belonged to the Pfizer-acquired Warner-Lambert Co., the victory is key to its future.

While it may be a stretch to say the agency's survival as a U.S. media brand hinged on the outcome, the win in the all-or-nothing shootout provides a level of sustenance-especially as Carat labors to vault from a second-tier media agency to the cadre of leaders. Of course, if it's not a blue-chip agency yet, the victory assures it remains a blue-pill agency, continuing to handle the strategy and buying behind Pfizer's blockbuster Viagra.

For MindShare, already among the industry leaders, the loss of Warner-Lambert-and the review -is not as sharp. The Warner-Lambert business accounted for about 5% of MindShare's $8 billion in U.S. billings. Still, emotionally, it was tough for MindShare executives to take. MindShare's predecessor, the media arm of J. Walter Thompson Co., had handled media work for Warner-Lambert for decades and relationships between client and staff were close-knit. A MindShare spokeswoman declined to comment.

JWT's New York office remains a creative shop for Pfizer's Warner-Lambert division.

Pfizer was Carat's largest U.S. client, representing an estimated 12% of billings, which now grows to an estimated 28% with the win. No other Carat account-including RadioShack Corp., Midas or CBS-comes close in billings or prestige. The consolidated Pfizer account is the 10th largest in the U.S. across all industries, according to Nielsen Monitor Plus data.

"It keeps Carat in business," one rival media buying executive said. "It was certainly a quality of life issue."

PRINCIPAl client

Exactly how the upstart Carat was able to outduel the more prominent MindShare is unclear. Fees likely played a role, with Carat offering a more favorable arrangement since the account meant more to it. But Mr. Rutman denied that: "Pfizer was very clear all along that this was all about media, not fees."

Pfizer may also have liked the fact that it would be the principal client at Carat, where it would have joined Unilever, Ford and IBM Corp. as top billers at MindShare.

As with most reviews, the role of previous client relationships cannot be underestimated-though in this case there were two of them. The principal reason the review dragged on from last summer was believed to be the fierce loyalty Warner-Lambert executives, including division VP-Advertising Services Kaki Hinton, felt toward MindShare and the similar devotion Pfizer officials, including Media Director-Team Leader Donna Campanella, felt toward Carat. In the end, Warner-Lambert execs appear to either have given in or been overruled.

"Pfizer bought Warner-Lambert," said the rival media buying executive, "so if there's a tie, the acquirer wins."

Carat North America CEO David Verklin said Carat had an edge because the agency was "on the right side of the acquisition." But he said Pfizer is a research company, "and we are a research company that buys media [so] there is a philosophical connection between us."

Mr. Rutman said he never considered the consequences of watching the agency's most prized account slide out the door, though he hinted at the pain that might have followed. Carat is a dominant media operation in Europe, but only in its fourth year in the U.S. after Aegis Group made several acquisitions in a bid to replicate its overseas success.

"It would have been a terrible blow, particularly at this point in our product life stage," the 49-year-old former head of Coca-Cola's planning business said. "But we would have come in the next day, dusted off and been ready for the next challenge."

Clearly, such resolve is easier in the abstract. A loss likely would have meant layoffs among Carat's 200 New York employees. Now the agency will likely add staff as others on Madison Avenue retrench.

A loss might also have sparked the exit of Mr. Verklin. Industry execs said the well-respected Mr. Verklin recently was courted by Omnicom Group CEO John Wren to take the vacant CEO post at OMD Worldwide. Mr. Verklin said he isn't going anywhere.

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