Crispin's Breakup With the King Results in $300 Million Whopper Sacrifice
Notably, the company will hunt for a new agency without a chief marketing officer, as Exec VP-Global CMO Natalia Franco departed in February, only nine months after she filled a protracted CMO absence. North America CMO Mike Kappitt left the company in December.
Last fall, Burger King Holdings was bought by 3G Capital, a New York-based investment firm with Brazilian ties. A week after the ink dried, Bernardo Hees, a 3G partner and Brazil native, was named CEO of Burger King, succeeding John Chidsey, who became co-chairman and will leave the company April 18. Burger King, meanwhile, aligned global brand marketing and global operations teams into a single function.
Burger King did see a sales increase after CP&B signed on, but sales turned south in 2009, with the company reporting negative same-store sales from second-quarter 2009 through third-quarter 2010, the most recent quarter publicly reported. Technomic estimates that Burger King's U.S. sales for 2010 were down 2.5% to $8.7 billion. Comparatively, McDonald's was up 4.4% to $32.4 billion and Wendy's was relatively flat, down 0.6% to $8.3 billion.
While some might blame over-the-top marketing campaigns, a source of consternation among franchisees, Burger King has shown an appetite for over-the-top, offensive and arguably bad advertising -- and not just from CP&B.
In global markets Burger King showed a Hindu goddess perched on a ham sandwich and ran a crass ad for a seven-inch-long sandwich, depicted entering a blonde woman's mouth; copy read, "It'll blow your mind away." Those were created by a local Spanish agency and Singaporean agency, respectively.
"They've lacked a cohesive strategy of what products are, and what the marketing message is," said Ron Paul, president of Technomic. "Many consumers wouldn't be able to tell you what they're promoting, other than their spokesman. The sales results speak for themselves."
Much of its menu and messaging targeted young men, a demographic hit by the recession. McDonald's, meanwhile, posted gains with family and value messaging. BK, which spent $301 million on U.S. measured media in 2010, per Kantar Media, also funneled nearly 58% of its U.S. ad budget during the last few months of 2010 into its newly revamped breakfast menu, a day part McDonald's already dominated.
CP&B representatives declined to comment on the loss beyond a joint statement issued with Burger King. But people close to the shop say it's trying desperately to rejigger staff in order to prevent layoffs, as it did when it lost the plum Volkswagen business in 2009.
A Burger King spokesman said it will conduct a review sans search consultants, adding that it typically conducts its own agency reviews. Agencies with large enough presences and without conflicts that could compete include Dentsu's McgarryBowen, WPP's JWT, Publicis Groupe's Saatchi & Saatchi and independents Wieden & Kennedy and Cramer-Krasselt. While WPP's Ogilvy & Mather, Brazil, works for franchisees, Ogilvy is otherwise in conflict due to its global Yum Brands business.
Under CP&B's model, the loss of affect agency's six offices. While Microsoft is probably CP&B's largest account by revenue, Burger King is easily one of its top five and one of the shop's truly global clients at a time when CP&B is focused on expanding its footprint internationally.
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Contributing: Rupal Parekh and Laurel Wentz