More bad news for Bates on CVS, Hyundai

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Beleaguered Bates Worldwide is being slammed by two more body blows-the loss of Hyundai Motor America's regional dealers' media account and a review of CVS drug stores' $35 million business.

The moves come as Cordiant Communications Group's Bates is reeling from the departure of the $170 million national Hyundai business and the subsequent resignation of President Bill Whitehead. It also missed out on a larger piece of the business when Aegis Group's Carat North America was awarded the newly combined $400 million national media-buying accounts of Hyundai and sibling Kia Motors America after a review to which Bates was not invited.

walking Away

Now the media portion of the dealers' total $200 million account has left Bates' garage, and creative is likely to follow. On May 28, the agency told dealers it was dropping media. The split comes months before Bates' contract for both creative and media expires Sept. 30.

At the same time, CVS has gone up for review, according to agency executives familiar with the move, although it's not clear whether media, creative or both are up for grabs. CVS wouldn't comment. It's believed Bates is defending the business and that Interpublic Group of Cos.' Hill, Holliday, Connors, Cosmopulos, Boston, is in the pitch. The agency could not be reached for comment at press time.

Bates did not return phone calls for comment regarding CVS or Hyundai. But Don Hicks, a Colorado dealer on the marketer's national council, said Don Evanson, an independent media consultant based in Secaucus, N.J., hired by the dealers, is already negotiating with Carat for their regional media buying accounts. Mr. Hicks said his Western region wanted to give Carat a trial run before handing it their account by letting it buy fourth-quarter media already reserved by Bates, which would have been retained through the end of the year.

Left up in the air is creative for the dealers. Independent Richards Group, Dallas, which won Hyundai's national creative account April 29 and took it over May 1, will make a presentation to the presidents of the four dealer groups in Dallas June 26. James Auffenberg, an Illinois dealer who heads the central region, said Bates' contracts require 90-day notification for termination, so "we have to give them notice by July 1."

Considering the outcome of Hyundai's other account moves, the odds aren't in Bates' favor. "Bates' situation doesn't look good," Mr. Auffenberg said.

"Bates is done," predicted Mr. Hicks, who said it makes sense to use the same agency for national and regional ads. "Nobody is really happy about it, but it's just one of those things that happens in business."

Dave Weber, VP-marketing at Hyundai, said the marketer is "encouraging the dealers to give Richards a very hard look because the ideal way for us to both compete is going down the path with the same people." Mr. Weber has continually denied Hyundai's parent in Seoul, South Korea, called for the Bates' split.

Bates had one of the worst new-business performances of any major agency in 2001: $120 million won and $75 million lost, for just $45 million in net new business. Church & Dwight last year bought Carter-Wallace brands and took them in-house. Bates handled the $15 million to $30 million Arrid, Nair, Trojan and First Response business for the marketer.

In addition to most of Hyundai driving away, this year Bates parted with the estimated $15 million to $20 million Department of Defense Joint Recruitment Advertising Program in January. On the plus side, Bates and its 141 Communication unit were big winners in Allied Domeq's global consolidation. And the agency is one of five finalists in the long-running Office of National Drug Control Policy review, on which a decision is expected any day.

contributing: hillary chura, alice z. cuneo, richard linnett, laurel wentz

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