Conflicts brew for automakers

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DaimlerChrysler Corp.'s $2.4 billion consolidation is only the latest sign of how automakers, agencies and car accounts are going global -- and it won't be the last. All of these machinations could push agency conflicts to the fore. But at this point, the matter of conflict has yet to catch up with the reality of the changes.

"The conflict issue is somewhat being ignored [by carmakers,]" said Jim Sanfilippo, former VP-marketing at Kia Motors America and now exec VP at Automotive Marketing Consultants. Agency firewalls upheld by their holding companies were seemingly suspended in DaimlerChrysler's recent global agency shootout, he said. "Ordinarily, you don't have the holding company executives close to the client," he said. "The skirt seems to have been lifted."

Mr. Sanfilippo was referring to meetings between top DaimlerChrysler executives and Omnicom Group CEO John Wren and True North Communications Chairman-CEO David Bell. The car marketer met separately with only those two executives when it awarded the global Chrysler, Dodge and Jeep account to Omnicom

Arthur "Bud" Liebler, senior VP-global marketing of the carmaker's Chrysler Group, said agency conflict issues were discussed in early meetings with True North and Omnicom, which will handle DaimlerChrysler through BBDO Worldwide's new PentaMark Worldwide. If BBDO took on another U.S. car account, "that would be an enormous issue for us," he said, since "90% of our business is in the U.S. and North America."

There seems to be virtually no chance BBDO would try to take on another U.S. car line given its strong ties to Chrysler. But Omnicom will need to steer carefully to manage its garage of car accounts given its heightened global role with Omnicom.

Among holding companies, Omnicom has the most experience in handling competing brands using separate agencies. In the U.S., Omnicom's GSD&M, Austin, Texas, handles Land Rover, which earlier this year was acquired by Ford Motor Co. Its TBWA/Chiat/Day, Playa del Rey, Calif., handles Nissan North America; France's Renault acquired a controlling interest in Nissan's Japanese parent, Nissan Motor Co., last year. Omnicom's Goodby, Silverstein & Partners, San Francisco, handles American Isuzu Motors, controlled by General Motors Corp.

BBDO's non-U.S. offices handle some rival car brands. For example, Almap BBDO in Brazil, seen as the top creative agency in Latin America, is best known for its award-winning work for Volkswagen and Audi.

Other Omnicom agencies besides BBDO have car accounts outside North America, including DDB Worldwide, which handling Germany's Volkswagen. But Mr. Liebler said the accounts are in countries in which DaimlerChrysler doesn't sell many of its U.S. brands.

Mr. Liebler said the carmaker may address conflict policies country-by-country on car accounts outside North America. "We would be willing to address each of these on an individual basis," he said.

John Bulcroft, a former car company ad director who is now president of consultancy Advisory Group, said he wouldn't be surprised to see DaimlerChrysler AG Chairman Juergen Schrempp press Omnicom to ditch its competing brands. There is a precedent that predates Daimler's acquisition of Chrysler: When True North acquired Bozell, Jacobs, Kenyon & Eckhart in 1997, the holding company's FCB Worldwide network was forced to resign the $240 million Mazda North American Operations, controlled by rival Ford Motor Co. Then-Chrysler Corp. had concerns about a conflict with its Jeep, Eagle, Plymouth and Chrysler accounts at Bozell Worldwide.

Ford has broadened its stable of brands in the past two years. The carmaker acquired Land Rover from Germany's BMW earlier this year and the car business of Sweden's Volvo last year. That's in addition to its controlling interest in Japan's Mazda Motor Corp.

Ford has considered a global agency realignment since late 1999 (AA, May 15), three executives close to the automaker said.

Jim Schroer, VP-global marketing, declined comment, via a spokeswoman. She said Ford expects professionalism from its agencies to keep proprietary information from a sister shop with a non-Ford car account.

Mr. Schroer is said to want more creative shared globally, as is currently done to some extent by Ford's Jaguar Cars via a partnership with sister WPP Group agencies J. Walter Thompson Co. and Ogilvy & Mather Worldwide.

Volvo also has used some of the same creative globally since 1997. This past summer, Volvo consolidated its $50 million pan-European account at Messner Vetere Berger McNamee Schmetterer/Euro RSCG, New York. Messner, owned by France's Havas, already handled Volvo in the U.S.

WPP's acquisition of Y&R this past spring consolidated its Ford business. The carmaker's conflict concerns helped squelch Publicis' plans to acquire Y&R this year. Ford also was quick to move media buying for Volvo and Land Rover from non-Ford agencies to its dedicated U.S. agency, JWT's Ford Motor Media, Detroit.

Industry watchers point to Publicis' September acquisition of Saatchi & Saatchi as a potential trouble spot, even though France's Renault last month told Advertising Age it's not worried about any conflicts between its global agency, Publicis, and Saatchi, which has Toyota Corp.'s account in 31 countries, including the U.S.

"Saatchi is not going to take on another car account in the U.S.," said Steve Sturm, VP-marketing at Toyota Motor Sales USA.

He said Toyota USA, like most carmakers, has an unwritten agency conflict policy that its agencies know, understand and honor.

Publicis & Hal Riney, San Francisco, handles General Motors' Saturn Corp. account. "The Saturn part of Publicis doesn't conflict with our business," Mr. Sturm stated.

But he added further agency consolidations involving Publicis and Saatchi could change Toyota USA's current stance. And, Mr. Sturm pointed out that overseas there's a "different dynamic" concerning agency conflicts.

"American clients are more sensitive to agency conflicts," Mr. Bulcroft said.

GM had a conflict policy its agencies had to adhere to, said a former GM marketing insider who asked not to be named. "The world has changed so much, so I don't know GM's policy now," said the executive, who left about a year ago., a Detroit-area Web site, speculated in an Oct. 25 report that GM would consolidate all its ad work at Interpublic Group of Cos.

Later that day, an analyst who phoned into Interpublic's quarterly conference call asked whether that was true. An Interpublic executive responded that he didn't know, but added if the car giant was considering such a move, the only direction to go was Interpublic.

Industry experts pooh-poohed the issue, pointing to GM's recent award of its consolidated $2.9 billion U.S. media planning account to Bcom3, the holding company created by the merger of the parents of two longtime GM shops, Leo Burnett USA (Oldsmobile) and D'Arcy Masius Benton & Bowles (Cadillac and Pontiac).

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