Philips consolidates $600 million at DDB

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Amsterdam-based Royal Philips Electronics is consolidating its $600 million global advertising account at Omnicom Group's DDB Worldwide as it looks to raise its profile in the U.S.

Philips' global account had been split between DDB Worldwide and Publicis Groupe's Leo Burnett USA, which took on over $250 million of Philips' business following the closure of holding company sibling D'Arcy Masius Benton & Bowles. With the win, Philips becomes one of DDB's top five accounts.

The consolidation is aimed at preparing Philips for a huge corporate branding campaign to link itself more distinctly to its products. A Philips spokesman confirmed the current tagline, "Let's Make Things Better," is under review.

Philips Chief Marketing Officer Andrea Ragnetti said the company had not called a creative review, but had simply spoken to both agencies. Ultimately, Philips decided that it felt most comfortable with DDB's creative team. Late last year, Philips handed DDB Worldwide a $75 million corporate-branding assignment.

"Philips in the U.S. is a $10 billion business," Mr. Ragnetti said. "Consumer electronics makes flat-screen TVs; we are also very active in medical systems, semiconductors, lighting and domestic care. We want to establish a clear connection between our brands and Philips."

According to Mr. Ragnetti, much of the focus of future campaigns will be on the U.S., where he said the company ranks No. 2 behind General Electric Co. in medical systems. "We don't have enough recognition in the U.S.," he said. Philips spent only $90 million on measured media in the U.S. last year, according to TNS Media Intelligence/CMR.

DDB in New York and Result DDB in Holland will handle most of the work, though Mr. Ragnetti added that he may need another office in continental Europe and possibly in Asia. "The Asian strategy for Philips is currently under review," he said. Philips has offices in Hong Kong and Singapore.

transition plan

Philips' products are sold in 160 countries. Its consumer brands include Norelco razors and Sonicare toothbrushes.

DDB Worldwide President-CEO Ken Kaess said, "We are thrilled. The next step is to sit down and put in place a transition plan and a service model. We'll have to restructure and we'll have to add more staff."

Besides Philips, the agency's other top accounts include McDonald's Corp., Volkswagen, Clorox Co. and Johnson & Johnson. DDB was already handling consumer electronics, semiconductors, components and corporate work for Philips Group.

Burnett handles domestic appliances and personal care, and Philips' lighting and medical divisions. That work, estimated at $250 million to $300 million, will transfer to DDB at the end of this year. However, Burnett will be retained for unnamed special projects.

"We are disappointed with Royal Philips' decision to consolidate its brand advertising elsewhere," a spokeswoman for Burnett said. "We had successfully transitioned the business from D'Arcy and launched new creative work for various Philips brands."

The loss heightens competition between DDB and Burnett. The agencies went head-to-head over McDonald's business recently. The fast-feeder selected an idea from DDB to spearhead future campaigns, although McDonald's insists Burnett does not lose any work.

In June, DDB also picked up Dell's pan-European creative assignment. The estimated budget was $70 million to $90 million.

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