Lowe Worldwide Wins Zicam Account

Spending on Cold Remedy Expected to Increase $20 Million This Year

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NEW YORK (AdAge.com) -- Matrixx Initiatives, the maker of cold remedy Zicam, has named a new agency and has a new plan to take advantage of local advertising rates that are crumbling in the wake of the auto-ad-market free-fall.

The account has gone to Interpublic Group of Cos' Lowe Worldwide after a four-month review. The account was previously at McCann Erickson, Los Angeles, and this pitch marks the first time the marketer has ever put its advertising out to bid. Matrixx spent about $30 million to market Zicam in 2008, but spending this year is expected to go up to $50 million in billings.

Earlier this month, as part of an earnings call, Matrixx Initiatives -- which exceeded analyst expectations even in a low-incidence cold and flu season -- was candid, saying that more than half of its operating expenses are devoted to advertising. Treasurer Bill Barba said of $53 million in operating expenses, $31 million came from marketing.

"Within that $31 million, I want to say between $20 and $22 million was probably TV advertising, and the rest goes to print, online, social media, consumer research and other items," Mr. Barba said.

They also addressed the threat of generics to the Zicam business and noted that contrary to what people might think, the brand hasn't seen a boost from the swine-flu scare.

What Zicam chief had to say
Below, we've excerpted some of the earnings call. You can see the rest here.

Asked whether Zicam planned to take advantage of lower ad rates, Bill Hemelt, acting president, chief financial officer and chief operating officer, had this to say:

"We are looking at a variety of alternatives to how we plan our marketing, and we may try to do more localized marketing. We know when certain areas are going on alert for the colds and flu, so that maybe we might run a very heavy dose of local advertising in those markets. Some of that local advertising is pretty cheap.

"Everybody is aware that the automobile companies have cut back on their national advertising, which has affected national advertising rates, but you also have an even greater cutback on the local markets of local automobile dealerships that have dropped local rates, I think, even further.

"So we think we can take advantage of that and really have a very heavy, heavy dose of advertising right before markets go into an alert state."

Asked whether the swine flu had affected business, Mr. Hemelt said:

"With respect to the swine flu I don't think that has been a factor as much as the season, for what it is worth, in the last two or three weeks has finally gone ahead of last year's level. So we are seeing a higher level of illness than we did at the same time last year. I don't think that is driven by swine flu. I think it is just driven by other flu and cold viruses out there."

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