Innocean drew snarky whispers when it was announced in late 2008
it would be assigned the Hyundai business. It had a tough act to
follow in celebrated shop Goodby,
Silverstein & Partners, which had won the coveted auto account
after a shootout against four other agencies in 2007.
The undertone of that whispering was negative, skeptical even,
that a shop so closely tied to the client could carry out
needle-moving creative work. Innocean, operating in 12 countries,
is part of the Hyundai Group chaebol (Korean
conglomerate). It is also owned by Hyundai Motors chairman Chung
Mong Koo and his daughter Chung Sung-yi. Such an arrangement, while
anathema by current corporate-governance practices in the U.S., is
the cultural norm in South Korea where the biggest companies --
Hyundai, Samsung, LG -- have long been controlled by Korean
But so far, Innocean's work has been pretty solid. And there is
plenty of pressure to keep it that way from Hyundai CEO John
Krafcik, who recently hired former General Motors advertising
executive Steve Shannon to be marketing chief. In a habit developed
when current GM global marketing chief Joel Ewanick was at Hyundai
between 2006 and 2010, the U.S. arm of Hyundai likes big media
stages: Super Bowl, Academy Awards, Olympics and national political
conventions. "Make no mistake, there is no place for Innocean to
hide if they aren't doing [breakthrough] creative and strategic
work," said Mr. Krafcik.
He conceded he didn't have much of a choice in hiring Innocean.
"It wasn't so much a question of if it was going to happen, but
rather when," said Mr. Krafcik. "But I was intrigued from the start
by the idea of them creating an agency from scratch around our
For Innocean's executive creative director, Jeff Spiegel, who
joined the agency in mid-2009, the decision to come to Innocean was
not that hard, he said, once he understood the plan. "It is really
a very well-funded startup agency that we can shape from a clean
sheet of paper -- that's a very attractive thing," he said. Don
Longfellow, the strategic planning chief at Innocean, echoes the
sentiment. "I have been able to design the planning function,
integrating traditional and off-line (digital) functions exactly
the way I want to without legacy operations, systems, politics ...
it's been a great opportunity."
It is also true, though, that for most of the past two years
since opening its doors in the U.S., Innocean has largely carried
out a brand brief written by Mr. Ewanick and Goodby. Centered on
the tagline, "Think About It," the strategy originally had been
intended to remove any perceived risk in buying a Hyundai (based on
a legacy reputation of bad quality in the 1990s) by emphasizing
warranty protection and third-party endorsements from the motor
"Goodby's work was very good, and I was happy to continue down
the road that was laid out," said Mr. Spiegel. The biggest
evolution of the strategy by Innocean has been to go from asking
car buyers to "reconsider" their perceptions about the automaker to
one that confidently challenged the assumption that Toyota and
Honda are not peer brands of Hyundai.
But now there is at last some new direction. Starting with the
most recent Super Bowl, Hyundai began using "New Thinking. New
Possibilities," a global strategy that Mr. Sanfilippo said was
hatched by Hyundai's marketing group in Seoul and later adopted as
a tagline. "We are moving from a strategy of removing obstacles to
purchase to pride in ownership," said Mr. Longfellow.
Innocean's creative has ranged from steady message-centered work
like the recent Elantra launch ads that emphasize its 40 mpg
highway fuel economy to more humorous stuff. One recent ad showed a
sheep driving a competitor's car; a holiday end-of-year retail
effort featuring an eclectic and campy couple whose music act is
called Pomplamoose that pumped showroom traffic in December and
went viral on YouTube.
Not that industry award shows are the last word in creative
achievement, but Innocean's U.S. office made the Cannes short list
at the International Advertising festival in 2010 for the first
time. "That was a big deal for Innocean, and a big source of
pride," Mr. Spiegel said. "We are definitely pushing and reaching
all the time to produce the kind of work that will be recognized on
a world stage."
It's being noticed. Hyundai has become the fifth-largest
automaker in the world, and, in the U.S., it has been one of the
fastest growing brands. In March, the company sold more than 60,000
vehicles, including nearly 40,000 Sonatas and Elantras. Hyundai and
sibling Kia Motors together sold more than 100,000 vehicles in
March, just the second time in the companies' U.S. history they
reached that mark. Hyundai is attracting customers with credit
scores higher than those of Toyota, according to Mr. Sanfilippo,
who cited proprietary research. And its risky foray into luxury
cars with the $35,000-plus Genesis sedan has been met with critical
success from the auto press, and sales success at the dealership.
In the Southeast, Hyundai's share of the luxury car market is
already above 10%, according to data supplied to Hyundai by R.L.
Last November, Hyundai grew even bolder in the luxury segment,
introducing a $60,000-plus Equus positioned above its Genesis, and
Innocean built a mobile app that digitally replaced the Equus'
owners' manual. Hyundai supplied Equus owners a free iPad with each
Equus and shot a commercial cleverly depicting an owner reviewing a
highly animated "owners manual" displayed on an iPad. It caught
competitors flat-footed and was deemed one of the best automotive
applications so far.
Innocean grew out of the 6-year-old (Hyundai Group-owned) World
Marketing Group, a low-key operation by design that consolidated
Hyundai's and Kia's media buying. That operation was more
reminiscent of the old Hyundai, which was often reticent to assert
itself publicly. Coming off a horrific period of product quality,
bad publicity and falling sales in the 1990s, Hyundai often flew
under the radar in marketing. That anonymity, which extended to not
even having a WMG phone-book listing, said Innocean Senior VP-Media
Operations Cynthia Jensen, made it tough for the agency to hire top
talent or even get early cracks at some media opportunities.
That changed a lot when Mr. Ewanick took over marketing in 2006
and WMG hired Initiative to handle buying for Hyundai and Kia. Ms.
Jensen, who had held senior posts at Y&R on Ford and FCB's Irvine, Calif.,
office before WMG and then Innocean, is largely responsible for
both Hyundai and Kia often getting some of the most plum media
buys, such as Hyundai's placement as first ad on CNN coming out of
Barack Obama's acceptance speech on Election Night.
Ms. Jensen is just one of a handful of seasoned agency
executives who makes up the senior management team, deflecting the
idea that client-owned agencies can't attract top talent from other
agencies: Mr. Spiegel came from DDB, Los Angeles, where he was group director
on Wells Fargo and Activision and clocked 10 years at Team One on the Lexus business before
that; Senior VP-Director of Planning Mr. Longfellow, who came to
the agency from Ogilvy & Mather's
L.A. office, where he was planning chief on brands such as Yahoo
and Cisco, and before that Saatchi &
Saatchi, where he worked on 17 Toyota model launches; Senior
VP-Creative Account Services David Minkin, who held senior posts at
Ketchum launching the Acura brand for Honda, and at Team One on
Lexus; Senior VP-Creative Director Ed Miller, who leads all the
retail-driven advertising came from TBWA/Chiat/Day, where he held a similar
position on the Nissan business; and Account Director Valencia
Gayles, who had been chief operating officer at multicultural shop
The team was assembled largely by Mr. Sanfilippo, who was
recruited from Team Detroit to WMG
in June 2008, and soon got a call from Mr. Ewanick. "He said 'Start
an agency from scratch and get it ready to handle Hyundai in six
months'… I was flabbergasted."
Mr. Sanfilippo had plenty of history with Hyundai. From 1986 to
1994, he held a series of posts with Hyundai's agency, Backer
Spielvogel Advertising, eventually running both the national and
dealer accounts before landing at Kia Motors America in 1995 as
director-planning and then head of marketing. He also had worked at
Volkswagen, Chevy, and WPP's Team Detroit, and is known for having
one of the deepest Rolodexes in the car business.
After a few months of occupying fairly anonymous-looking space
in Irvine, Calif., Mr. Sanfilippo persuaded Innocean to go for the
Huntington Beach office space. Korean management thought the
location -- a walking-friendly village of retail, restaurants and
boutique offices -- somewhat unconventional at first. His reasoning
-- that the space, situated on the oceanfront and away from bland
highway-side "dental" office parks, would both distance the agency
from an "in-house" image and help in talent recruiting -- won them
over. There is a total of 35,000 square feet stretching across
three separate but literally bridged spaces, and another
3,000-square-foot studio space, with more to come. Surfboards adorn
the walls, and there is a combination of windowed as well as
interior offices that could easily be mistaken for space created by
leading agencies such as TBWA or Crispin, Porter & Bogusky.
Because of the growth in business just from Hyundai, the agency
is looking for additional pockets of space around the village to
create a "campus"-like office atmosphere.
Innocean's Korean management is anxious to prove its chops
beyond handling Kia and Hyundai. In Seoul, more than half the
agency's revenue is said to come from non-Hyundai-Kia business. And
though it's been open just six years, it's in a dozen countries,
with plans for four more in the next year.
Innocean and Mr. Sanfilippo are looking for a rainmaker who can
help get curious, if reluctant, marketers to at least have a
look-see at the agency's team and approach. It should help in the
U.S. that Innocean has a handy case study of success with Hyundai
But industry consultants say it will not be easy. "The tricky
part is that clients who feel they might be overshadowed by Hyundai
will want to see an effective firewall between Hyundai and the
non-Hyundai business, but then again you want the people who have
been key to Hyundai's success working on your brands," said Cameron
McNaughton, consultant at McNaughton Auto Perspectives.
Mr. Sanfilippo has experience at agencies heavily dominated by a
single automotive client. He worked at Ford's agency, Team Detroit,
as CMO in 2006 to 2007. That agency has several non-Ford
Messrs. Minkin and Spiegel both worked at Team One, though that
shop has never been too successful in attracting non-Lexus work,
proving the difficulty Innocean may have. Mr. Minkin said the key
will be to show "we are interested in other clients with real
vigor, which we are. ... If you don't, the new-business consultants
can smell that in an agency and it doesn't work."
The source of new business may initially come from multinational
Korean companies that do business with Innocean in Seoul and
elsewhere. There aren't many of those, though, because the biggest
Korean companies, like LG and Samsung, also have their own ad
shops. That model would also make Innocean look much like Dentsu
USA, which for years has had a client roster dominated by Japanese
companies that do business with the agency in Japan.
While there has been some growth through the "rebundling" of
important services as Innocean proves its prowess, some
assignments, like dealer meetings, auto shows and the Hyundai Golf
Tournament, can come through a request-for-proposal process, and in
some cases are assignments that it had previously pitched for and
lost. Both Hyundai and Kia have a huge appetite for marketing
services, but "they aren't handing us anything without us working
for it," said Mr. Sanfilippo.
There is some speculation that Innocean will eventually be given
the Kia Motors business in the U.S. (Mr. Sanfilippo denies this)
since the agency handles it in South Korea and the other markets
around the world. Innocean already handles media strategy and
oversight for Kia. Kia's creative has been handled in the U.S. by
David & Goliath
since 2000, and D&G works closely with Innocean. That agency
also has significant other business, such as Mattel, Bacardi,
Universal Studios, California Lottery and Carl's Junior. Because of
this, some have speculated that Innocean and D&G would make a
good fit, but David Angelo, chairman and chief creative officer,
seemed to brush off that notion.
"We are flattered to have been approached, through the years, by
a number of holding companies with an eye for acquisition. The
truth is, we have had no acquisition conversations with Innocean to
date, and we are perfectly happy right now as a leading independent
agency," he said.
The biggest issue at a shop such as Innocean is keeping creative
tension with a client that technically is one of its owners.
Innocean's Hyundai account director Ms. Gayles who has worked at
Deutsch, said it's
not an issue. "They probably won't fire the agency, because of the
way it is set up, but we know in this business we are all
replaceable, so we keep tension at a healthy level by taking
nothing for granted and challenging Hyundai to do new things."
Can Innocean find its own signature despite being owned by
Koreans who have a very different culture but who are also its
biggest client? Ms. Gayles said she thought Deutsch's culture was a
bit like USC, "almost athletic in the way we wore our brand on our
sleeves." Her idea for Innocean: "More like my alma mater,
Columbia, where the sports programs aren't very good, but a lot of
smart people go there."
As for sports, there's always surfing.