SPLIT DECISIONS GROW AS ADVERTISERS SEEK EDGE;CREATIVE TREND HAS SAME GOAL AS CONSOLIDATION

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When United Airlines decided to replace its longtime ad agency Leo Burnett Co. with two other agencies last month, disappointed executives at the Chicago shop quickly settled on an interpretation.

"They had to hire two agencies to replace our one," said several Burnett managers.

Indeed, United executives were reluctant to rely on one agency for all of their marketing needs. In choosing Fallon McElligott, Minne-apolis, and Young & Rubicam, New York, the airline joined a number of other prominent marketers that have recently decided one just isn't enough.

Call it the year of the split decision. In addition to United, marketers ranging from Boston Market to Blockbuster Entertainment to Miller Brewing to Hardee's are showing reluctance to limit their creative resources.

SEEKING A CREATIVE EDGE

What's fueled this boom in roster expansions is the same thing that fostered the recent reverse trend of consolidations: Marketers want a creative edge, and are changing the nature of their agency relationships to get it.

The trend raises some significant questions, including wheth-er agencies that share accounts will be able to put aside egos and work as a team and whether having more than one agency working on the same brand will bolster or fragment that brand's image (see Bob Garfield's review, Page 22).

In the end, though, successful advertising has far more to do with the quality of an advertiser's agency relationships than with the quantity of them.

"Certain clients deem it appropriate to have more than one agency. Others are uncomfortable with that," said Roy Spence, president of GSD&M, Austin, Texas. Either way, successful creative comes from "the spirit of cooperation."

ACCELERATING TREND

Earlier this year, Boston Market split its account among three West Coast agencies after parting ways with J. Walter Thompson USA, New York. Hardee's Food Systems bulked up its roster with a second agency, the Pearlstein Group, Los Angeles, that in turn hires a new set of free-lancers and producers for each assignment.

Struggling with the launch of its new Miller beer, Miller Brewing Co. used three different agencies for three strikingly different campaigns since January. It's now focusing resources on other brands.

Blockbuster Entertainment Group recently said its two shops will compete against each other on every national assignment. And McDonald's Corp. has all three of its national agencies working on the same product launch-in addition to two ethnic shops.

VIRTUAL AGENCY

In switching to three midsize agencies from one behemoth, Boston Market sought stronger relationships with senior agency creatives.

"We think it's working well," said Trey Hall, VP-marketing. "We go right to the people who do the work."

The company called its arrangement a "virtual agency." Mr. Hall, the self-described management supervisor, said traditional agency account management chores are handled in-house. For creative, Goldberg Moser O'Neill, San Francisco, handles the core dinnertime business, while Suissa Miller, Santa Monica, Calif., works on Boston Carver sandwiches. Team One, El Segundo, Calif., handles Hearth Honey ham and holiday/seasonal lines.

Goldberg Exec VP-Creative Director Mike Moser said the setup gives Boston Market control of the creative teams working on given projects. With only one agency, the chain's smaller projects would almost certainly fall to more junior teams, he said.

WORKING

WITH TEAMS

Wanting access to talent at two or more agencies isn't new (see story below). Big advertisers from AT&T Corp. to Sears, Roebuck & Co. have trusted their brand images to teams of agencies.

"The size of our business is such that it demands the expertise and attention of a number of agencies," said Steve Graham, national director of marketing communications at AT&T, which has relied on multiple agencies for decades. "There are so many big projects and assignments to be handled that one agency couldn't do it all."

AT&T, the nation's sixth-largest advertiser with $1.1 billion in annual spending, currently has four core agencies, all based in New York: FCB/Leber Katz Partners handles consumer advertising; Y&R has corporate branding and development; BBDO Worldwide works on special services and projects like Olympics advertising; and McCann-Erickson Worldwide handles business advertising and wireless services.

"Multiple agencies allow us to bring great talent to the business from the thinking and creative as well as media perspectives," Mr. Graham said.

SEARS HAS TWO SHOPS

Sears has used two agencies since 1993, when Y&R joined Ogilvy & Mather worldwide, Chicago, on the roster. Y&R developed the "Softer side of Sears" tagline that has been instrumental in the retailer's comeback, and variations of that theme have been used by both agencies.

"We have a diverse group of businesses resting under the umbrella of brand Sears, such as apparel, automotive, home furnishings, appliances and home services," said John Costello, the retailer's senior exec VP and general manager-marketing. "We think two agencies enable us to get the best breadth and depth of thinking."

The approach doesn't work for every company. IBM Corp. had 46 agencies worldwide and decided that was 45 too many. In the spring of 1994, it consolidated its $450 million global ad account at Ogilvy & Mather Worldwide, New York.

NEED FOR COHESION

Abby Kohnstamm, the VP-corporate marketing who engineered the switch, cited the need to present more cohesive ad messages and the challenge of training agencies in explaining the decision.

Other big brands that rely on a single or dominant agency worldwide include Nike, N.V. Philips and Marlboro. Philip Morris Cos.' flagship cigarette was recently named the world's most valuable brand by Financial World; it has been handled by Burnett since 1954.

Still, seven of Financial World's top 10 brands use more than one agency in the U.S. alone, including Coca-Cola Co. and McDonald's.

Most of the time, agencies sharing accounts have clearly defined and delineated responsibilities. The most common split is the one United chose: international and domestic.

United rival American Airlines has used a similar split for years, with Temerlin McClain, Dallas, handling U.S. advertising, and DDB Needham Worldwide, New York and Dallas, handling international. Others, including Ford Motor Co., use one agency for product advertising and another for corporate image work.

Until USAir consolidated its entire account at McCann this summer, it used one agency for image work and another for retail advertising.

COKE'S RENOWNED MOVES

Then there is Coca-Cola, which when it selected Hollywood talent agency Creative Artists Agency became the most renowned practitioner of the plural approach.

While that relationship has changed, the No. 1 beverage marketer uses dozens of agencies for its stable of brands, often doling out a single brand's projects to several agencies and sometimes pitting two agencies against each other for an assignment.

Coca-Cola Chief Marketing Officer Sergio Zyman believes an agency's primary function is to serve as a creative vendor.

"We [the company] are the keepers of our brands," he has said repeatedly.

Still, there is method to Coca-Cola's madness. In-house agency Edge Advertising-an offshoot of the previous CAA operation-handles Coke Classic's "Always" campaign globally, while Wieden & Kennedy, Portland, Ore., handles the brand's sports-related ads around the world. Other agencies pick up tidbits; W.B. Doner & Co., Southfield, Mich., handles ads supporting special Christmas packaging, for example.

McDonald's has used Chicago agencies DDB Needham and Burnett for nearly 15 years, and recently added a third national agency, Fallon. It also uses four regional agencies in the U.S.

The fast-food leader used to give each of its agencies distinct roles, but it has changed its approach this year to foster a competitive environment.

For the $70 million launch of its Arch Deluxe line, McDonald's held a review between Fallon and Burnett. Though Fallon won and handled the initial phase of the introduction, all three agencies plus two others eventually produced and aired spots for the new line.

CONSTANT COMPETITION

Blockbuster has gone even further, deciding in September that roster agencies Y&R and Bernstein-Rein, Kansas City, Mo., will compete for every national assignment.

Brian Woods, Blockbuster's exec VP-chief marketing officer, said he hopes the competition will help the company attain higher-quality creative.

Agency executives say the competitive approach can work but is fraught with challenges.

"Knowing that they're not the only guys on the block encourages agencies to work harder," said Mike Rogers, exec VP-executive creative director at DDB Needham's New York office. "But you can't get into a situation where your goal is to beat the other agency rather than doing what is best for the clients. You can't look over your shoulder instead of looking ahead."

"To come up with great ideas you need trust and partnership," said Avi Dan, senior VP-strategic planner at Ryan Drossman & Partners, New York. "You can't develop this trust and partnership when the next agency is sitting in the reception area with its slides and ads."

United's split could prove especially difficult, because both Y&R and Fallon are joining the roster after a two-month competition.

MAKIING IT WORK

"We hope we can do this. We're not going to be destructive," said Pat Fallon, chairman of Fallon.

Y&R and Fallon had their first joint meeting with United two weeks ago; cautious agency executives said it went well.

"Nobody got hurt," joked one.

Southwest Airlines has used two agencies since 1990. After 10 years with GSD&M, it put its account into review and, like rival United, chose two agencies: incumbent GSD&M and Cramer-Krasselt, Chicago. The airline, which uses mostly local-market advertising, parcels out projects on a case-by-case basis.

"It often depends on workload-which agency can best handle a project at that time," said Peter Krivkovich, president of Cramer-Krasselt. Over a year's time, the billings tend to split evenly between the two agencies.

Mr. Krivkovich identified three requirements for successful sharing of an account.

"First, both agencies have to have a high respect for one another. Second, both agencies have to buy into the strategy. It also takes a strong client."

Sears' Mr. Costello added: "The keys to making it work are clear objectives, teamwork and an opportunity for both agencies to grow their responsibilities."

The biggest danger in hiring multiple agencies is having multiple brand images, said Mike Hughes, president-creative director of the Martin Agency, Richmond, Va.

"Most advertisers will end up scattered if they try it," he said.

"Making sure everything adds up to the same impression" isn't easy, agreed Arthur Bijur, president-executive creative director at Cliff Freeman & Partners, New York.

COORDINATING MESSAGES

That's the client's problem, said AT&T's Mr. Graham: "With a number of agencies, the onus is on us to make sure all the messages are coordinated and represent one consistent voice coming from the company."

With marketers seeing opportunities in working with groups of shops, some believe more agencies-particularly smaller shops-might be willing to swallow their pride and jointly pitch accounts with other agencies.

"There are no pluses for large agencies like Burnett and McCann, but there are pluses for midsize agencies like ourselves," said Donny Deutsch, CEO of Deutsch, New York.

Added GSD&M's Mr. Spence: "We see advantages in strategic alliances. They bring some power to our house."

GSD&M joined with independent public relations agency Fleishman-Hillard, St. Louis, to pitch and win an image assignment earlier this year for the American Petroleum Institute and the Independent Petroleum Association of America. Bigger contenders in that review used subsidiary PR agencies as partners.

Ad holding companies often encourage their sister shops to work together on accounts. For example, Interpublic Group of Cos.' Lowe & Partners/SMS, New York, and Martin Agency work together on Mercedes-Benz of North America.

Other times it happens by coincidence. Goodby and DDB Needham, both Omnicom Group agencies, recently created ads for a Budweiser freshness-dating initiative at client Anheuser-Busch's request.

NO RULES NOW

The ad business is famously cyclical, so it remains to be seen whether the latest creative trend is a permanent shift or a temporary blip. In either case, it's clear marketers' willingness to think more creatively about the nature of agency relationships is here to stay.

"Right now there are no rules," said Mr. Deutsch. "Advertisers are looking for the best custom-made solutions. You're going to see more and more of this a la carte approach."

Contributing: Alice Z. Cuneo, Kim Cleland, Jean Halliday, Jeffery D. Zbar

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