Bates: Big Hyundai Loss Won’t Shutter OC Doors
By JENNIFER BELLANTONIO
Irvine-based Bates West USA’s top brass in New York says it doesn’t plan to close up shop here after losing another big chunk of work from Hyundai Motor America but is assessing fallout from the defeat.
“Bates is committed to having a West Coast presence,” said William Whitehead, president of New York-based Bates North America, the West Coast unit’s parent and part of London-based Cordiant Communications Group PLC.
But, Whitehead said, the “scope of that presence has yet to be determined. We are going to wait and assess the situation.”
Bates USA West last week lost part of its biggest account with Fountain Valley-based Hyundai Motor America and could lose the rest of Hyundai business.
After a dramatic three-month review, Hyundai handed its $160 million national creative account to The Richards Group Inc., whose clients include Home Depot Inc., Nokia Corp. and Motel 6, a unit of Paris-based Accor.
Bates West is sure to feel fallout from the Hyundai decision. The loss of the automaker’s creative account is a second big blow in recent months: In March, Hyundai gave its media buying and planning account to Aegis Group PLC’s New York unit, Carat North America.
Following that news, Bates cut its OC staff by about 10%, or 12 people. According to its Web site, Bates West now counts 104 workers.
Dallas-based Richards plans to open a Seal Beach office to work on the Hyundai account. Along with incumbent Bates, Richards beat out two other finalists: Publicis & Hal Riney in San Francisco and Seattle-based Publicis in the West, part of Paris-based Publicis Groupe SA.
Select Resources International in West Hollywood ran the review.
Bates’ latest loss has industry observers wondering whether its Irvine office will indeed survive.
The shop still handles advertising for Anaheim-based Pacific Sunwear of California Inc. and Aramark Corp.’s uniform services division, based in Burbank. But neither account is on the same scale as Hyundai.
Whitehead was adamant that Bates will stay, and hinted that the shop could go after other automotive work.
“We have a premier automotive group on the West Coast that has brought unparalleled results for Hyundai,” he said. “I believe there may be other automotive clients who want to take advantage of those superior capabilities.”
Bates still has Hyundai’s National Dealer Association business, estimated at more than $100 million yearly, according to a company official.
The dealer’s group is set to meet shortly to decide whether to move the account from Bates, said Dave Weber, Hyundai vice president of marketing, in a company statement.
When asked if Bates will fight to retain the business, Whitehead said, “The decision is up to the dealer’s association.”
Observers believe that the Hyundai’s South Korean parent was pushing to consolidate media buying duties for the automaker and its sibling, Irvine-based Kia Motors America Inc., in order to save money and gain more media clout. The combined Hyundai business is estimated to be $460 million.
The changes have blindsided Bates officials and stunned industry observers. In OC, a number of ad types were rooting for Bates, particularly after Irvine-based Foote, Cone & Belding Southern California dropped out of the review because a sister company, with another automotive account, had a potential conflict.
Mark Weinfeld, Bates’ former senior vice president of strategic planning, recently called the creative review “an absolute kick in the stomach” and “completely unexpected.”
He told the Business Journal that the loss of Hyundai’s business “cuts out the heart and soul of what has built this agency.”
Weinfeld recently accepted an executive level position at W.B. Doner & Co.’s Newport Beach office, which handles the Mazda North American advertising account.
Bates’ Whitehead also expressed shock at losing the account, though his reaction was a bit more reserved.
“(Hyundai) sales are up 205% in five years, intentions to purchase Hyundai are up 770%, awareness of the brand is up 29% and opinions are up 68%,” Whitehead said. “With those kind of results I think everyone was surprised.”
Bates had been the automaker’s agency of record since its U.S. launch in 1986.
In past interviews with the Business Journal, Hyundai officials said they weren’t “dissatisfied” with Bates’ advertising work, but that they wanted to “make sure we have the best possible job (being done).”
Hyundai’s Weber said Hyundai’s “Driving is believing” tagline will probably be dropped. He wouldn’t discuss a future ad campaign.
Richards took the reins on the creative account last Wednesday, a day after Hyundai’s contract expired.
Stan Richards, agency principal, said the first campaign will break around October. He said the agency will manage the account out of its Dallas headquarters, with support from an OC office to be established here in the next two weeks.
Richards is looking at office space in the same building as Grupo Gallegos, a Seal Beach-based Hispanic ad shop that the agency founded in 2001.
The office is set to be staffed with about a dozen employees, the shop said. Some workers will be new hires and others will be transferred to OC from Dallas.
