Bates USA will lose planning duties for some $200 million in media spending by Warner-Lambert Co. in the wake of the drug and consumer products giant's acquisition by Pfizer.
In an emotional meeting two weeks ago, Pfizer executives told Bates the agency would be stripped of its media planning chores on a range of Warner-Lambert products, from cholesterol drug Lipitor to Certs breath mints.
The executives also told the New York agency it would be left out of the review to consolidate Pfizer and Warner-Lambert's estimated $738 million combined media planning and buying account.
The prize will go to either Pfizer agency Aegis Group's Carat USA or WPP Group's MindShare, both New York; the shops are the only ones in the review and are scheduled to make presentations to Pfizer executives on Aug. 14 and 15.
A Pfizer spokeswoman confirmed the review participants.
Bates will continue to do planning for Certs, Lipitor and other products such as Benadryl, Clorets, Dentyne and Sudafed for only a short time longer.
"We're planning the fourth quarter right now," said Bill Whitehead, president-CEO of Bates North America, part of Cordiant Communications Group. "But we know we are not part of that review."
Planning duties for two prescription drugs that treat the symptoms of menopause in women--Loestrin and Femhrt--have already been moved out of Bates. The work has been transferred on an interim basis to Carat, where the drugs join the fleet of Pfizer's prescription products such as Aricept, Viagra and Zyrtec.
Also on an interim basis, Pfizer has placed its entire estimated $190 million print buying account at Carat, shifting business from MindShare. (J. Walter Thompson Co., which along with Ogilvy & Mather media operations formed MindShare, handled media buying and shared planning with Bates on Warner-Lambert.)
The move is an attempt by the company to achieve volume discounts--as a general rule, the more an advertiser spends, the lower the prices--in the short-term since Carat buys so much print space for Pfizer.
"There is some business that must be done near term, and they decided to [capitalize on] the volume discounts that already exist on Pfizer business, which is being handled at the moment by Carat," said an executive close to the situation.
Better volume discounts is at least one reason why Pfizer wants to place all media duties under one roof.
The temporary consolidation of print buying at Carat is not viewed by executives close to the review as a sign that Carat is the favorite over MindShare. But industry observers for some time have speculated that Carat will emerge the winner, in part because Pfizer is believed to be satisfied with its work and Pfizer executives are leading the combined company.
An executive involved in the review when Carat won Pfizer media duties in late 1998 said, "The selection was intended to be a long-term one." He said Carat's research ability was a deciding factor that had a special appeal at a research-driven pharmaceutical company. He joked that Pfizer employees "research what soup is served in the cafeteria the next day."
Since Pfizer has acquired Warner-Lambert, it is widely viewed as the company that will make the final decision, in which case Carat is seen as a heavy favorite.
"Pfizer didn't merge with Warner-Lambert, they bought the company. It's their game," said the executive close to the advertiser. "I'd be much more comfortable if I was the Pfizer incumbent than if I was the Warner-Lambert incumbent."
At Bates, the future could be much cloudier compared to Carat. The agency, which has been a Warner-Lambert shop since 1950, next may face the loss of creative duties on the fleet of ex-Warner-Lambert brands it handles, including Dentyne and Lipitor.
And it is not the only agency on pins and needles as the new Pfizer takes shape. Other Pfizer and Warner-Lambert creative shops hope they will not have a fate similar to what Bates is suffering on its planning business.
Shops doing business with Glaxo Wellcome and SmithKline Beecham also are concerned about what the future holds. Those two companies are scheduled to merge next month and that could mean a split with some agencies.
Even though there only two incumbent media agencies in the Pfizer planning and buying review, it is being handled by a New York-based consultant, Alvin Achenbaum. He conducted the last review for Pfizer in which Carat was awarded media planning and buying. He did not return phone calls.
Copyright August 2000, Crain Communications Inc.