Wendy's International has decided to move its $100 million national media account from Zenith Media back to Bates USA, New York.
The move is a significant blow to Zenith and illustrates the difficulties faced by consolidated media operations.
Zenith Media is a worldwide operation; its U.S. division was started in 1995, and currently consists of the media buying operations of Bates and Saatchi & Saatchi Advertising. The three outfits are owned by Cordiant.
Bates is creating a retail unit for Wendy's, integrating the account, creative and media functions under one roof. Steve Auerbach, a media veteran who's served as a consultant lately, has been brought in to shepherd the account. Mr. Auerbach, who could not be reached for comment, is the former top media manager at DeWitt Media, New York, and has also consulted with Wieden & Kennedy, Portland, Ore., on its Microsoft Corp. account.
'JUST A LOGISTICAL MOVE'
"It's really just a logistical move so everyone will be physically together," said a Bates spokeswoman of the move.
Wendy's had thought a dedicated buying unit set up by Zenith last year would be satisfactory, but later changed its mind.
Charles Rath, Wendy's exec VP who oversees marketing, did not return phone calls. Zenith referred an inquiry to Bates and Wendy's.
Wendy's local buying, estimated at about $40 million, will stay with Zenith.
The fast-food chain is not the first Bates' client to pull business from Zenith. Miller Brewing Co., unhappy with Zenith's performance, moved its $200 million local and sports media account to Leo Burnett USA, Chicago, in December.
BIG MOVE TO BATES
"The two biggest Bates clients are now basically out of Zenith, though Wendy's has left some spot there," one executive close to the agency noted. "That leaves, for all intents and purposes, about half a dozen Bates clients spending about $150 million or so still there. The rest are primarily Saatchi clients" such as Toyota Motor Sales USA.
Estimated total billings at Zenith are between $1.25 billion and $1.75 billion.
A number of Bates media personnel have left Zenith in the last year; many complained that the operation was dominated by managers from the Saatchi side.
The Wendy's defection further erodes one of Zenith's founding principles--the idea that the pooling of millions of dollars in client spending would give the media operation more clout to negotiate better rates.
CARTER-WALLACE TO ZENITH
It also calls into question the fate of similar planned media units.
"It makes you wonder what's going to happen with J. Walter Thompson and Ogilvy & Mather," said one media executive, referring to the plan by the two WPP Group agencies to form an alliance for the coming network TV upfront marketplace. If the alliance succeeds, WPP is expected to merge the media operations.
"It's interesting that both WPP and Cordiant are British-based," the executive added. "The media model outside the U.S. is really different, and these kinds of consolidations have worked in Europe and other places. But I just don't know if they can work here. There are long-standing cultural differences at all these agencies, even ones owned by the same holding company."
Some clients have been more receptive to Zenith than others. For example, Zenith recently won $20 million to $30 million in media business from Bates client Carter-Wallace.
Also, clients not with either Bates or Saatchi may be able to judge Zenith more objectively. Bristol-Myers Squibb Co. awarded Zenith a $40 million media account, for example, although it isn't a client of either Cordiant agency.
Contributing: Mark Gleason, Laura Petrecca.
Copyright March 1997, Crain Communications Inc.