The adage used to be that an agency never gets fired for making a 30-second ad. But Saatchi is rapidly revising its spot-centricity as it scrambles to stay in favor with key client Toyota.
Publicis Groupe's Saatchi & Saatchi, Los Angeles, is the latest shop to find itself forced to reinvent by a marketer-in this case the country's No. 4 automaker, Toyota-that is determined to shift away from TV ads. The situation for the agency is made even more urgent by the scrutiny of Toyota VP-Marketing Jim Farley, a known change agent who is looking at the carmaker's agency relationships and is said to have questioned whether the umbrella ad tagline, "Moving Forward," works for consumers.
Before being promoted to his current spot last April, the 44-year-old Mr. Farley oversaw the launch of Toyota sub-brand Scion, using largely nontraditional media, and an executive with knowledge of the business said the carmaker's push for more such campaigns has caused friction between client and agency. A Toyota spokeswoman confirmed this, but said "friction" is healthy. "It's natural and a good thing. They're challenging us and we're challenging them." The source of the friction? "Because there's new strategic thinking at Toyota for bigger and broader ideas beyond TV," she said.
David Murphy, who arrived less than a month ago from Y&R to head Saatchi Los Angeles, the office which handles the account, declined to comment. But one agency insider claimed Toyota's concerns had been partly assuaged by the recent hiring of John King as head of digital media and Peter Kang as head of digital creative.
Mr. Farley insisted Toyota, which spent $548 million in measured media in the first 10 months of 2005, is happy with Saatchi. "Saatchi has hired quite a few new folks. They've lived up to our expectations, hiring David Murphy. Harvey Marco, the creative, is getting more responsibility. He's hiring more young creative teams, those that understand more one-on-one marketing."
Taking its lumps
Saatchi is still taking its lumps, however. In an interview in The Wall Street Journal, Mr. Farley rated the ad pitches made by Saatchi for two of this year's sales promotions as two out of ten. "I'm not hearing the consumer," he said of the ads. "These ads are about the company's agenda. It's just not relevant to the consumer."
Executives close to the marketer said Mr. Farley wants to change the brand's "Moving Forward" tagline, too. He denied that, as did his boss Jim Lentz, VP-general manager of Toyota Motor Sales USA, who said the automaker has "no plans to move off" that tag. He did, however, concede that the line "is probably moving a little slower than we wanted it to," in terms of consumer awareness.
`"Moving Forward' is not a tag but a corporate philosophy," said Toyota's corporate-manager marketing communications, Kim McCullough. "It's who we are." She admitted that only 23% of consumers connect the line to the automaker.
Just as painfully for Saatchi, it has watched the automaker slowly but surely expand its roster. Last year, espousing what it called a "layered media" approach, it brought in Omnicom Group's Rapp Collins, and it is clearly intent on shifting dollars into customer-relationship management and one-on-one marketing.
It has also handed assignments to independent Ground Zero and to DCA Advertising, a Dentsu agency formed by its acquisition of Oasis Advertising in New York. Attik, San Francisco, did the non-traditional campaign for the launch of the Scion.
In U.K. and parts of Europe four-year-old London hot shop Clemmow Hornby Inge has won around $215 million of Toyota business that was formerly with Saatchi-about half of its business in the relevant markets. CHI is interested in opening in the U.S., according to executives familiar with the agency.
Toyota has also had discussions with other agencies, including recent conversations with Arnold Worldwide, according to executives familiar with those discussions. Mr. Farley, however, denied any knowledge of the agency. Insiders said both Arnold, which recently lost automaker Volkswagen, and Toyota, have had a number of informal chats and that they are not necessarily meaningful.
Still, executives with knowledge of Saatchi said the agency was scrambling on Toyota, which is notorious for squeezing its suppliers. They also said that Mr. Farley has a history of working differently with agencies, bringing in different companies for different projects, and that he has been given the latitude to try new things at Toyota because the Scion launch is perceived to have been such a success.