'Fresh' approach: Calif. Lottery ratifies BBDO, ends debacle

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After three years, four "apparent successful bidders," allegations of collusion, formal protests and a legal threat, a gag order, a disqualification for faxing rather than hand-delivering documents and even an untimely power outage in the middle of final presentations, the California Lottery has a new ad agency.

On a sunny spring morning last week in Sacramento, three members of the California Lottery Commission unanimously cast their votes to approve agenda Item 11-the staff's selection of Omnicom Group's BBDO West, San Francisco, as winner of the four-year, $100 million general-market advertising contract, with an option for a two-year renewal at $25 million a year. The vote ended one of the industry's most bizarre and prolonged reviews. The first review was called in 2001, but each round ended in acrimony and protests from the participating agencies over how the review was conducted.

Lottery Marketing Director Jim Hasegawa in his report to commission members, said, "One of the key reasons BBDO received a higher rating than other finalists was its unique and in-depth understanding of Lotto players as well as its very insightful and strategic advertising approach to SuperLotto Plus." BBDO not only received the highest scores on its strategic direction for marketing SuperLotto Plus for 2004-2005, but "provided a very favorable media efficiency and effectiveness plan, as well as the lowest markup rates."

fresh view

BBDO won the pitch with a "fresh approach" to the Lottery's business challenge, "a change in how you approach the target and what the lottery is saying to them," said Tom Hollerbach, BBDO West's president-CEO, who will be the lead account executive on the Lottery business. He declined to discuss further details. But one executive present at the pitch said that during final presentations in the agency's downtown San Francisco offices the power went out in mid-presentation, causing a computer to crash and leading some in the room to become concerned the pitch was doomed.

After three other failed attempts to select an agency, Mr. Hasegawa said the Lottery succeeded this time around thanks to significant input from the advertising community and a draft request for proposal that allowed agencies to comment on proposed requirements. One, which would have required the agency to defend the state in any legal actions stemming from the review, was dropped from the final RFP. Lottery Commissioner Stacy Marks said that since no agency protested this final round, it was proof the process was successful.

no hype

The Lottery in recent years has wrestled with the fact that SuperLotto has not soared into the hundred-plus million prize numbers that draw media hype, player hysteria and ticket sales, but instead has been awarded at lower jackpots. "People don't think $7 million can change their life anymore," said Larry Varnes, vice chairman of incumbent Grey Global Group's Grey Worldwide, Los Angeles, which held the account for a record seven years.

In addition to Grey, BBDO bested three other contenders including sibling Omnicom shop DDB, Los Angeles, once an apparently successful bidder that lost out due to disclosure problems. DDB pitched jointly with Alcone and OMD. Interpublic Group of Cos.' Dailey & Associates, West Hollywood, Calif., also in the review, had once sued the Lottery; it settled out of court. Independent Ground Zero, Marina del Rey, Calif., holder of another state contract for antismoking advertising, was the third.

In all, about a dozen agencies were involved over the years. Three agencies-Grey, DDB Worldwide and Interpublic's Foote Cone & Belding, which was disqualified for faxing, rather than hand-delivering its bid-tried for the account all three times it was in review. BBDO nailed the win on its first foray.

When all was said and done, the Lottery review will go down in advertising history as the "poster boy for bad reviews," an exercise in survival, said Russel Wohlwerth, a principal at Select Resources International, an agency review consultant. He noted, however, that the Lottery was not solely at fault. "The agencies clearly had a hand in making it a bigger deal than it had to be."

Fast Facts

Oct. `01 RFP issued

Jan. `02 DDB wins; Grey protests

April `02 Second RFP

July `02 FCB wins

Aug. `02 DDB protests

Sept. `02 Rebid called

March `03 McCann wins; FCB disqualified

April `03 Lottery calls for third RFP

Nov. `03 RFP issued

April `04 BBDO wins

May `04 Contract starts: May Day

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