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Saatchi & Saatchi, following a significant new assignment from General Mills, is forming a new unit called Saatchi & Saatchi Retail Partnership Marketing.

The move puts Saatchi at the forefront of co-marketing, a discipline broadly defined as the diversion of trade funds to advertising programs that aim to jointly build retailers' and marketers' brands.

Co-marketing has been gaining steam among leading marketers, including Saatchi client Procter & Gamble Co., which in 1996 shifted $120 million from its consumer and trade promotion budget to co-marketing programs.


The Saatchi start-up comes after the New York agency emerged victorious in a pitch for a Big G co-marketing project; the agency and marketer declined to discuss the assignment. Saatchi beat out Campbell Mithun Esty, Minneapolis, and DDB Needham Worldwide, Chicago. The prior agency is Grey Advertising's J. Brown/LMC, the industry segment's leading player.

Chairman Jack Brown said his co-marketing agency could no longer handle Big G's cereal business because of a conflict with Grey's Post cereal account.

"The Mills win is important because it provides Saatchi with the capability to prove to [P&G] that they can do it," said an executive close to Saatchi.

J. Brown/LMC, Stamford, Conn., currently handles some co-marketing for P&G, including its Tide account. P&G does not have a co-marketing agency of record.

Although spending on the General Mills project is small, observers said the business could blossom into a significant account.

"Strategically, it's a huge win for Saatchi, if not financially," said Burt Flickinger, consultant with Reach Marketing, which partnered with DDB Needham on that agency's losing General Mills pitch.

"Saatchi's developed an aggressive new-business area after the Cordiant breakup," he said, adding that he believes Saatchi is targeting P&G's co-marketing business, particularly for Tide.


Besides Grey, the only other major agency with a presence in co-marketing is True North Communications, which owns a specialty shop called MGR. DDB Needham also is exploring ways to grow its co-marketing efforts, through a startup or acquisition.

"Every one of our clients is looking into this arena. It's the trend of the future," said Saatchi & Saatchi New York Vice Chairman Mike Burns. "There are huge dollars going to trade allowances and a smart agency sees it as a huge volume opportunity to be had."

Saatchi is also said to be considering acquiring a co-marketing agency; executives with leading independent shops, including Ryan Partnership, Westport, Conn., and Mars Advertising, Southfield, Mich., said they haven't had discussions with Saatchi, although Mars has partnered with Saatchi on co-marketing projects in the past.

Saatchi & Saatchi North America Vice Chairman Tony Dalton said "it's a bit too early" to talk about acquisitions or alliances.

"We've built up the team internally," he said, adding the agency is examining how its 12 Toyota field offices can be used to service the General Mills business. Saatchi hasn't yet named an executive to head the new unit. Sheldon Marks, an outside retail consultant who helped with Saatchi's Big G pitch, is said to be the leading candidate.

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