Pressure points at IPG

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When Reckitt Benckiser parted company with McCann-Erickson WorldGroup last week, it was due to a conflict with rival S.C. Johnson & Son, also a client of Interpublic Group of Cos. Although it was Reckitt that left, executives familiar with the situation say S.C. Johnson was the client pressing the conflict issue that cost Interpublic a roughly $150 million creative account.

The Reckitt loss is the latest page in what's been at times a severe five-year loyalty test for Foote, Cone & Belding Worldwide-S.C. Johnson's agency-and, now, the agency's holding company. S.C. Johnson may be small by the standards of its industry-less than a quarter the size of such rivals as Procter & Gamble Co. or Unilever. But it has wielded some big clout with its agency since consolidating what's now a $450 million global account with FCB in 1996.

Within months of the consolidation, FCB lost a $70 million account from Clorox Co., including the company's flagship bleach brand, because of a conflict with S.C. Johnson, and dropped out of a $350 million global review for Bayer AG because of that company's competing insecticide business.

A year later, S.C. Johnson helped thwart a boardroom challenge to former FCB Chairman Bruce Mason. And in 1998, S.C. Johnson applied pressure to help unravel an alliance between FCB parent True North Communications with what is now Publicis Groupe.

Following True North's acquisition by Interpublic earlier this year, a new conflict emerged. Reckitt Benckiser, perhaps S.C. Johnson's most fierce global rival across most of its household-products portfolio, had consolidated its global household-products creative account with sibling shop McCann prior to the deal in 2000.

The issue came to a head this summer as Reckitt launched its largest combined assault ever in North America with a combined effort estimated at $70 million, increasing the pressure against S.C. Johnson in air fresheners, glass cleaners, furniture polish and laundry stain removers-and gaining some significant ground. Reckitt reported last month it has tripled its North American market share for its Wizard air freshener brand, where it competes against S.C. Johnson's category-leading Glade, and the company's total global household-products revenue is up 10% to $3.4 billion for the first three quarters of 2001.

The privately held S.C. Johnson doesn't report quarterly revenue, but said annual revenue is $6 billion.

Reckitt and McCann last week portrayed the split as a mutual decision. "Over the last few weeks we have been discussing how best to resolve this," Elio Leoni-Sceti, exec VP-category development at Reckitt Benckiser, told AdAgeGlobal.com, "and regretfully, McCann-Erickson and ourselves have jointly agreed to part company."

But executives familiar with the situation said Reckitt had no desire to leave McCann, where it had a good relationship and a track record of success. S.C. Johnson, however, pushed the conflict issue, they said, ultimately forcing Reckitt out.

Asked whether S.C. Johnson forced the change, an S.C. Johnson spokeswoman would say only: "FCB has no conflicts between us and any other client at the agency. We have a long relationship with FCB and we're planning to continue working with them."

Reckitt has yet to name a new agency, but the company would find similar conflicts with such rivals as P&G, Unilever, Colgate-Palmolive Co., Clorox and Henkel, within the three other largest holding companies and one major independent-Publicis Groupe, Omnicom Group, WPP Group and Grey Global Group.

OTHER OPTIONS

Reckitt would not likely face similar conflicts within Cordiant Communications or Havas Advertising. Havas' Messner Vetere Berger McNamee Schmetterer/Euro RSCG now handles Reckitt's food brands.

But with significant business in far-flung corners of the world, including Latin America and Indonesia, Reckitt could be hard for all but the most global of agencies to handle. McCann had established a special headquarters for Reckitt in London and a network of 22 offices.

Reckitt's other competitors appear unlikely to press the same conflict issues as S.C. Johnson. A spokeswoman for Clorox, whose business is handled globally by DDB Worldwide, San Francisco, said its policy is to permit other Omnicom shops to handle rivals, provided the agencies operate independently and proprietary information remains confidential. P&G adopted a similar conflict policy in 1999, and Unilever and Colgate likewise co-exist with competitors in the same holding companies in several cases.

Contributing: Ali Qassim, Lisa Sanders, Stephanie Thompson and Laurel Wentz

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