Traditional shops feel the heat

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Pete Kovac, president of NKH&W, a Kansas City, Mo.-based business-to-business ad agency, knows firsthand that consumer agencies are poaching b-to-b accounts. Yellow Freight Systems is a case in point.

Despite winning a handful of Pro-Comm Awards for its work on behalf of the transportation company, NKH&W resigned the business when Yellow Freight put its account up for review last summer. Consumer shop Campbell-Ewald, Warren, Mich., eventually walked away with the lion's share of the account, estimated at $10 million annually.

"We're seeing more and more agencies that we wouldn't expect to see at some of the reviews, which I find very fascinating," Mr. Kovac said with a chuckle. "Ten years ago, and I won't name names, some agencies wouldn't stoop so low."

He suspects consumer agencies see b-to-b as a growth area. "If I were a household name agency," he said, "I'd figure out how to keep growing and how to keep the shareholders and Wall Street happy. I'd probably be stepping outside the traditional boundaries into b-to-b."

Spurred by the surge in spending by technology companies, b-to-b advertising has suddenly become big business. With an advertising budget of about $600 million, IBM Corp. is an account that Ogilvy & Mather is proud to have.

A multinational such as O&M is also well equipped to handle IBM's international advertising. And as cable TV has grown into an efficient way for b-to-b marketers to reach their customers and prospects, agencies with experience producing broadcast commercials are in demand.

TV branding campaigns are all the rage in b-to-b these days. Yellow Freight, for instance, wanted an agency that could develop a campaign to help stave off encroachment by Federal Express Corp. and United Parcel Service of America.

Mike Ganey, senior VP at Howard, Merrell & Partners, Raleigh, N.C., said the most exciting marketing wars are being waged not by consumer brands, but by b-to-b brands. "The true battlefield is b-to-b," he said.

Rick Segal, chairman of Cincinnati-based HSR Business-to-Business, said traditional b-to-b agencies hold one trump card: They have experience marketing to buying teams and complex combinations of employees, customers, prospects and investors, and know that selling a multimillion-dollar computer system is different from selling a 50-cent pack of gum.

"A general observation about business-to-business advertising is that it takes more to get it right," Mr. Segal said.

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