In a May 8 meeting in Newport Beach, Calif., Richards hopes to persuade the company's 576 dealers to park their media and creative accounts at the agency. Hyundai's four regional dealer groups make their own agency decisions. Their separate contracts with Hyundai's former creative shop, Cordiant Communications Group's Bates USA West, Irvine, Calif., expire Sept. 30.
"[Having one agency is] important, particularly with a brand that needs to establish a real connection. It's important for the brand and dealer work to come from the same voice," said Dale Hruby, Richards principal and senior account manager. "Our intent is to do our best to make the case that we would be the best partner for them on the national and local level."
Aegis Group's Carat North America, New York, in January won the estimated $340 million newly consolidated U.S. Hyundai and Kia Motors America media planning and buying account. Carat has made a presentation to dealers for the media portion of the account, according to one dealer.
A Hyundai spokesman said the marketer "would love to see all the [dealer] groups go with the national agencies," adding it is their choice.
Richards, the country's third largest independent ad agency and 34th largest overall, has its own media buying and planning units.
Hyundai fills a long void for Richards, which had Hummer from 1995 to 1998. It missed out onPorsche's $10 million account and Mercedes-Benz's $90 million account in 1993, Volkswagen of America's $110 million business in 1995, and the $40 million BMW Mini account in 2001.
Hyundai's newly created World Marketing Group, meanwhile, which the company said was formed to monitor Carat with an eye toward media savings, is expected to become significantly more involved in Hyundai's U.S. media business. WMG said it plans to hire 15 people.
The Hyundai loss is a major blow for Bates, particularly because the agency lost the carmaker's media account in January.
Recently, the agency won Parmalat's $10 million account but lost its $30 million Carter-Wallace business, which was moved in-house by new owner Church & Dwight. Bates is no longer in the $90 million U.S. Postal Service review but is a contender in ChevronTexaco's $100 million contest.
Introduced to this country in 1986, Hyundai's star has been rising since the late 1990s. Through April 2002, sales were up 29% to 118,406 units compared with a year ago. Bates had been Hyundai's only U.S. agency. It continues to handle the business in South Korea, Europe, India, Australia, Canada and Latin America. The agency wasn't invited last year to defend Hyundai's national media planning and buying account.
Money didn't determine win
Despite a request for proposals that called for "the highest quality work at the lowest price," Richards and Hyundai said money wasn't the determining factor. The creative portion is estimated at less than $20 million. Richards principal and founder, Stan Richards, wouldn't comment, but says Hyundai is Richards' largest client.
Though Hyundai seemed sold on Richards at the finals April 20, Dave Weber, VP-marketing at Hyundai in the U.S., said executives in the automaker's South Korean headquarters first needed to bless the selection.
Bates was a finalist along with Publicis Groupe's Publicis & Hal Riney, San Francisco, and Publicis West, Seattle. Mr. Weber said Richards had the best strategy and creative. Hyundai has grown largely based on low price, and Richards has built its billings on value-oriented brands such as Home Depot and Accor Lodging North America's Motel 6. Mr. Hruby said Hyundai's value proposition likely would continue but it would not be the only way Richards tries to bring Hyundai on par with Honda Motor Co. and Toyota Motor Sales USA within three to five years. Work breaks in the fourth quarter.
Hyundai will be managed out of Richard's Dallas headquarters, though the agency will open a field office in Seal Beach, Calif., near Hyundai. Mr. Richards said it would be dedicated to Hyundai and would not pursue other accounts. About a dozen people will be hired. Richards and Hyundai are discussing which Bates staff Hyundai would like Richards to interview. About 80 people work at Bates' Irvine office, with another 40 in field offices. John Upton, executive VP-group account director at Bates USA West, declined to comment on expectations Bates will cut staff in Irvine.
contributing: alice z. cuneo, laurel wentz and richard linnett