Amway knocking on agency doors

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For decades, the only advertising Amway needed was its legion of distributors peddling everything from liquid cleaner to vitamins. But that's changing as the company grapples with new business challenges and looks to counter an unflattering image.

Alticor, parent company of Amway-which now does business in the U.S. as Quixtar, a Web-enhanced version of the 56-year-old direct seller-is talking to a number of Midwestern ad agencies about a branding campaign that would combine traditional advertising and public relations, knowledgeable executives said. Alticor, which reported $6.4 billion in global sales for the year ended Aug. 31, 2005, declined to comment.

The move comes as retailers from Wal-Mart Stores to Tractor Supply Co. have encroached on Amway's rural and suburban base and online retailers have cut into its traditional shop-at-home customers. Several years ago the company trimmed its work force, mostly internationally and at headquarters, in face of pressure from Internet companies.

"The old model of someone coming to your house and selling is somewhat dated," said Allen Adamson, managing director of WPP Group's Landor Associates, New York. The company needs to reposition "Amway so it's not your grandma's Amway."

Consultant Burt Flickinger said Amway is paying the price of not doing mass marketing in the past. Indeed, TNS Media Services shows no measured media spending for the brand since 2001.

Alticor also has image problems. As a multilevel marketing organization, distributors bring in recruits and earn commissions on goods they sell as well as on sales of their network. Although Amway emerged exonerated from a federal investigation during the 1970s over whether it was an illegal pyramid scheme, the company still draws fire.

`Tough road'

In 2004, "Dateline NBC" ran a piece-complete with hidden camera footage of a revival-style sales meeting-that was critical of Quixtar. The program showed distributors who were destitute and contended some of the group's heavyweights made most of their money selling motivational materials. Quixtar disputed the report.

Amid this backdrop, carving out a new image for Amway will be a challenge. "It's a tough road," said one executive familiar with the review.

Among the agencies the company has talked to are Omnicom Group's Element 79 and independent Cramer-Krasselt, both Chicago. The effort is led by Tom Hall, chief brand officer for Alticor, executives said.

Amway already advertises in China, which is its biggest market; there, Amway broke the $2 billion sales mark during its last fiscal year.

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