Coca-Cola Co. signed a global alliance with Interpublic Group of Cos., putting Interpublic in position to pick up more and more of the $900 million in advertising for flagship Coke around the world.
The arrangement likely will usher in an agency consolidation, but Coca-Cola officials caution that local management around the globe will determine if they want to work with Interpublic shops or independent agencies in their regions.
Interpublic will "develop, refine and focus" strategies to ensure pertinent and consistent messages about Coke are relayed around the world, the company announced late Dec. 1. The two companies will form a marketing- communications advisory council, which will establish consistent standards and messages for brand Coca-Cola The move builds on a relationship with Interpublic's McCann-Erickson, which has worked on Coke since 1942 and fields ads for the brand in 89 countries.
"Interpublic will act as creative consultant and idea generator at the global level, enabling our marketers around the world to take the core messages about brand Coca-Cola and ensure their relevance to consumers at the local level," said Stephen Jones, chief marketing officer for the world's largest soft- drink company, in a statement. Interpublic will help manage Coca-Cola's global advertising, using both Interpublic and non-Interpublic resources.
The Coca-Cola brand represents about 60% of the company's unit volume, and the company spends about $900 million a year advertising the brand globally. Coke is sold in more than 200 countries. About 10 ad agencies around the globe work on Coke, down from more than two dozen just a few years back.
Coca-Cola made the announcement hours after Sanford C. Bernstein analyst Bill Pecoriello reported that Coca-Cola was consolidating the brand's global advertising with Interpublic shops in a move to a "one storyteller" advertising agency platform for 2001.
Lauren Rich Fine, an analyst with Merrill Lynch, said the Interpublic move makes sense. "It's a question of efficiency," she said. "Everyone else was consolidating, and Coke had gone in the other direction. This could signal moving in the direction everyone else is moving in."
Last month, Coca-Cola gave European agency of record Publicis an assignment to promote Coke across the continent next year, beating out McCann.
It's uncertain how agencies such as Bcom3's Leo Burnett, Chicago, and New York independents including Berlin Cameron & Partners and Kirshenbaum & Bond will be affected.
Cliff Freeman, CEO of Coke agency Cliff Freeman & Partners, said Mr. Jones told him Friday night that his independent shop would continue working on Coke and would not be affected by the Interpublic alliance.
"We look forward to working within the architecture that IPG establishes for Coca-Cola advertising," said Mr. Freeman, whose New York agency also works on the company's Fanta brand around the world.
One former independent might benefit: Deutsch, just bought by Interpublic, owns Rush, which has done African-American work on Coke brands. Deutsch is Snapple Beverage Co.'s agency of record, but Snapple has said it doesn't consider Coke a conflict.
Interpublic's Lowe Lintas & Partners, New York, handles Sprite.
The alliance takes effect early next year. A Coca-Cola spokesman said Interpublic's compensation has not been decided. Options include a retainer for the holding company or compensation via account shifts.
"Our team's mission is to reassert the essence of brand Coca-Cola and determine how it can be best communicated across the full spectrum of media, including: on line, experimental, in-store, and traditional advertising," Interpublic President John Dooner said in a statement.
Naming a global partner would seem to conflict with Coca-Cola's avowed think local/act local strategy. But a company spokesman said it fits in because local execs will be involved in local decisions.
He said Coca-Cola hasn't decided if it would take similar actions for other brands, including Sprite, Diet Coke and Minute Maid.
Contributing: Laura Hughes, Richard Linnett, Kate MacArthur and Laurel Wentz.
Copyright December 2000, Crain Communications Inc.