"That's the direction they're headed," said one. "They're not going to get there tomorrow, but that's what some key people there would like to do."
Other executives agreed AT&T is leaning in that direction but expressed doubt the company will ever find a way to actually do it.
`NO PLANS TO CONSOLIDATE'
"We have absolutely no plans to consolidate our three major agencies," said Marilyn Laurie, AT&T's newly installed exec VP-brand strategy and marketing communications. "People always get extremely nervous when there's a major change in strategy of this kind and worry they might lose some business."
Though it had five core agencies as recently as six months ago, AT&T now splits its $1 billion account among New York shops Foote, Cone & Belding (consumer services); McCann-Erickson World-wide (business-to-business and wireless); and Y&R Advertising (branding). Media buying is split between FCB's TN Media and Y&R's Media Edge.
The move to re-evaluate agency structure is being driven by John Walter, AT&T's new president and planned successor to CEO Robert Allen. Mr. Walter recently engineered a reorganization that centralized marketing responsibilities in an effort to send consumers a more cohesive stream of brand messages (AA, March 3). That goal might be easier to accomplish with fewer agencies.
Mr. Walter also is on a mission to cut costs. With its gigantic ad budget, AT&T probably spends more than $100 million a year on agency fees, so there could be significant cost savings in a consolidation.
Agency executives said there are a number of hurdles blocking the way to a consolidation. The ad accounts are sprawling, consisting of hundreds of separate assignments from dozens of different AT&T groups. And they will only get broader and more complex as AT&T expands into new businesses such as local telephone service.
Plus, each agency has strong relationships with AT&T.
Y&R is AT&T's hot agency of the moment, having just launched a new brand campaign that's pleased the marketer.
Contributing: Kim Cleland.