Delta's move to yank its ads in-house could set precedent

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Delta Air Lines' decision last week to pull its $33 million creative account from Publicis Groupe's Leo Burnett USA, Chicago, and bring it in-house could have ripple effects for other agencies with airline accounts.

"Airlines are desperate to cut costs," said Raymond Neidl, an airline analyst for Blaylock & Partners, New York. "And until the [economic] environment improves, they're looking to cut costs that won't affect revenue-generating ability. It's up to the other airlines whether they come to the same conclusion."

A marketing chief for one of the nation's top 10 carriers agreed: "Bringing advertising in-house and doling out project work is something a lot of people are going to take a look at."

The account for the nation's third-largest airline was with Burnett for three years. It was at Publicis' Saatchi & Saatchi for three years prior to that, and at Omnicom Group's BBDO Worldwide for 40 years, until 1997. Burnett's last campaign for Delta, touting online ticketing to avoid airport lines, was launched earlier this year. (To see Burnett's Delta work, go to QwikFIND aao69v.)

finding efficiencies

Now, the airline plans to use Atlanta boutique BrightHouse for projects, and executives close to the situation said Kirshenbaum Bond & Partners, New York, would handle project work for Song, Delta's low-cost carrier that launched April 15. Song media buying and planning is expected to be handled by Kirshenbaum's Media Kitchen. Lime PR & Promotions, the agency's public relations unit, is expected to handle promotional and partnership-marketing responsibilities. Kirshenbaum referred calls to Delta. Delta's media buying will continue to be handled by Publicis Groupe's Starcom Worldwide.

Vicki Escarra, exec VP-chief marketing officer for Delta, said in a statement last week that the decision "is about finding cost efficiencies within our organization." Ms. Escarra declined to comment for this article. Delta lost $500 million in the first quarter of 2003, and the latest Morningstar report prepared by its analysts called the company's business model "unsustainable."

Yet airline expert Terry Trippler of travel Web site is still troubled by Delta's decision, and hopes others don't follow its lead. "The airlines can't even handle public relations now, so how are they going to handle advertising?"

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