United Airlines divided its account in two in 1996. Now the world's largest airline will unite its global business at one of its two agencies, either Fallon Worldwide, Minneapolis, or Y&R Advertising, New York.
The review, expected to be decided early next year, comes after several years of subtle rivalry between the agencies and speculation that United would shake up its roster. An airline spokesman confirmed the carrier is in global consolidation discussions with Fallon, which handles the business in the U.S., and Y&R, which handles it in the rest of the world. United's global spending is estimated at more than $100 million.
THE 'NEW UNITED'
The account has taken on added enticement since the winner would handle advertising for the "new United" created by the proposed merger of United and US Airways. Federal clearance of the merger could come as soon as mid-January. United Chairman-CEO James Goodwin has said he is increasingly confident it will be approved, although some industry observers remain skeptical. The agency consolidation is not contingent on the merger.
United contacted Fallon and Y&R about its decision just after Thanksgiving, and both agencies are at work on proposals regarding their capabilities. Although other agencies have salivated at the prospect of taking a run at United, no outside shops will be invited to pitch the account.
"We feel good that we've got two of the best agencies in the business working for United right now and we're not soliciting proposals from any other firms," said the spokesman, Matthew Triaca.
Mr. Triaca cited three reasons for the consolidation: the need for one agency to create a consistent voice and message worldwide; the opportunity to realize cost savings; and the ability "to create a foundation for a long-term partnership and we think this would be a great first step."
The size of the account is difficult to determine. United spent more than $70 million on U.S. advertising last year, according to Competitive Media Reporting. Spending outside the U.S. is unclear, although it has been reported as high as $50 million. US Airways spent some $19 million in 1999, according to CMR.
CHALLENGES FOR THE WINNER
When United split the account four years ago, its decision was partly based on Fallon's lack of global resources. But Fallon has since been acquired by Publicis Groupe, giving it access to international resources. Y&R was also acquired this year by one of the leading global holding companies, WPP Group.
United, which has seen its earnings and reputation suffer in recent months as labor troubles have led to flight delays and cancellations, is seeking ways to trim costs. Mr. Triaca said it was not clear whether there would be changes made in agency compensation structures. "Obviously we're very cost sensitive with everything we do right now," he said.
The challenges that will face the winning agency range from continuing the resuscitation of the United brand to re-introducing the new airline and raising the awareness of United along the East Coast if the merger flies.
At the moment, the United brand has various faces around the globe. The airline's much-criticized "Rising" effort, created by Fallon, was dropped a year ago. In January, Fallon embarked on a post-"Rising" effort that focused on connecting people, or "uniting" them. In May, Y&R - in what now appears like an audition for the consolidation - launched its first work that departed from Fallon's campaign. Instead of Fallon's taglines playing off the United name, such as "Be United" and "Feel United," Y&R used, "Life is a Journey. Travel it well."
In recent months, Fallon's image work has taken a back seat to efforts to shore up the United brand after the summer turbulence. In August, the agency launched a TV spot featuring Mr. Goodwin apologizing for the airline's problems. Then United aired a spot touting its heritage. On a separate track, Fallon last week introduced a commercial promoting United's Web site.
Copyright December 2000, Crain Communications Inc.