After 50 Years, DraftFCB's Relationship With SC Johnson to End
This story has been updated with new information about how SC Johnson's duties will be split among the winning agencies.
After a protracted review, DraftFCB has lost the entire marketing account for SC Johnson, according to people familiar with the matter. Much of the business had been housed at Interpublic Group of Cos.' DraftFCB, Chicago, and other Interpublic agencies, so the loss delivers a serious blow to the agency. U.S. spending is estimated at more than $400 million; globally it exceeds $1 billion.
People familiar with the matter confirmed the account handled by DraftFCB will indeed be split between WPP's Ogilvy & Mather and Omnicom Group's BBDO. EnergyBBDO has won marketing and digital duties for pest control and home storage products. Ogilvy will handle fragrance and home cleaning.
A release issued by Ogilvy & Mather Friday morning said WPP's Group M, via Maxus, has been appointed to handle global media buying for all categories. Ogilvy also confirmed that Maxus will handle media planning globally on brands assigned to Ogilvy. No official word has come from SC Johnson or BBDO regarding media, though Omnicom Media Group may work on media through EnergyBBDO, most likely on planning duties for brands assigned to EnergyBBDO. OgilvyAction will handle global activation for all categories. Omnicom's Proximity, which was involved in the review, will not be handling any of the marketing duties assigned to BBDO.
It is also understood that Interpublic's Mullen, Boston, which was brought in two years ago on the Shout brand in a rare instance of SCJ working with shops outside of DraftFCB, will not retain the account.
It was not known at press time whether R/GA, part of the DraftFCB network, would retain any business. [UPDATE: People familiar with the matter say that EnergyBBDO has won digital across all categories, a development that likely results in the loss of digital work for DraftFCB R/GA.] Overseeing the review was consultant R3:JLB, formerly known as Jones Lundin Beals.
Agencies that had made it to the final round of the review were Ogilvy, with the help of media-agency sibling Maxus, which is part of Group M; EnergyBBDO, Chicago, which pulled in Omnicom Media Group (a unit that houses media agencies PHD and OMD), promotion agency TracyLocke and digital shop Proximity; and incumbent DraftFCB, believed to have been presenting with media agency Initiative , also an Interpublic shop, and R/GA.
The SCJ review, made public in December, covered the global account, including creative handled by DraftFCB, plus media duties handled by sibling agency Initiative ; digital duties handled by R/GA; the Shout brand business at Mullen; and non-U.S. media duties at Universal McCann.
Also up for grabs were SCJ's shopper marketing and promotion accounts, which were at Advantage Sales & Marketing's Integrated Marketing unit and WPP's OgilvyAction.
The DraftFCB-SCJ relationship goes back more than half a century through Foote, Cone & Belding, which merged with direct-marketing agency Draft Worldwide in 2006. It is one of the agency's biggest and longest-standing clients.
The list of potential contenders had been short from the beginning. SCJ, based in Racine, Wisc., has long had a rigid anti-conflict stance with holding companies, and the SCJ business is so large that many mid-size and independent shops wouldn't be able to handle the workload DraftFCB had. That left SCJ with two options: divide the DraftFCB business up among Interpublic shops that weren't in conflict; or to loosen its anti-conflict stance and open the business up to other holding-company networks.
Even with SCJ allowing other holding companies to participate, many networks were out of consideration because of conflict. Reckitt-Benckiser is with Havas (Euro RSCG); Clorox is with Omnicom Group ( DDB Worldwide); and Procter & Gamble Co.'s home-care business is with Publicis Groupe ( Saatchi & Saatchi, Leo Burnett Co. and Kaplan Thaler Group) and WPP (Grey Global Group).
How much the loss will devastate DraftFCB will play out in the coming weeks and months, though layoffs are sure to come, not only in the Chicago office, but also globally. Some international offices of DraftFCB are said to exist solely to service the SCJ account, and a sizable chunk in Chicago -- as much as 10% -- is implicated directly.
For the Chicago office, the loss of the SCJ business is another in a string of account defections. The agency, starting in 2009, lost various Kraft brands including Lunchables, Chips Ahoy, Cool Whip, Planter's, Jell-O and Macaroni & Cheese, but the agency does still work on one of Kraft's largest brands, Oreo. The agency also lost TV creative for State Farm, which went back to DDB after it left the agency for Draft, and in May lost the retail piece of its Kmart business. In April, DraftFCB lost the Homewood Suites hotel business after nearly 10 years.
Account wins over the last year or so for DraftFCB include Nestle's Tombstone pizza brand; digital duties for Taco Bell, which returned to DraftFCB after a stint at R/GA; Petco; global work for Beiersdorf and Valspar. DraftFCB is also the lead agency for the Kmart brand.
The review came on the heels of management shakeups both at SCJ and DraftFCB. The agency's former North American president and nearly 30-year veteran of the agency, Mark Modesto, abruptly left last August, along with Chicago Chief Financial Officer Bob Mallers and North American Chief of Staff Bill McCarthy. Little explanation had been given, though at the time it was understood that they were likely due to internal politics among the executives and higher-ups at DraftFCB. Mr. Modesto was best known for his ties to SCJ.
After Mr. Modesto's departure, Mark Pacchini took on oversight of the SCJ account. He had previously overseen the business account outside the U.S.
On the SCJ front, a series of management changes occurred in the last year and a half, led by the departure of Patrick O' Brien, SCJ's former president-developed markets, and the arrival of Richard Conti, a former longtime executive of rival Clorox Co., as North American chief operating officer.
The marketer spent $414 million on measured media in the U.S. last year, according to Kantar Media, with a total estimated $431.7 million in domestic marketing spending, according to Advertising Age DataCenter estimates. Its established business in Western Europe, combined with a rapidly growing Asian business, could put its global outlay close to $1 billion. SCJ spent about $875 million in 2009 on global marketing, the most recent data available, according to the DataCenter .
The news of Draft's loss was first reported by Crain's Chicago Business.