Orange County’s two biggest ad agencies were among a handful of shops fighting for work from Beverly Hills-based Hilton Hotel Corp.
Young & Rubicam Brands in Irvine won.
Hilton recently handed its $40 million to $50 million Hilton brand account to Y & R;, which beat out several ad shops, including incumbent Foote, Cone & Belding Southern California in Irvine. FCB had the account for seven years.
“This was a hard-fought agency review,” said David Murphy, North American managing partner at Y & R; in Irvine. “We’re proud that we prevailed over other top tier agencies from OC, L.A., Chicago and New York.”
Y & R;, a unit of Britain’s WPP Group PLC, bested Omnicom’s TBWA/Chiat/Day in New York, GSD & M; in Irving, Texas, Interpublic Group’s McCann Erickson in New York and FCB, part of Interpublic Group.
FCB will continue to handle advertising for Hilton’s Doubletree, Hampton Inn and Homewood Suites brands. All media-related duties for the Hilton account will be handled by Omnicom Group’s OMD in Playa del Rey.
FCB president Jon Tracosas did not return phone calls for comment.
The loss comes at a critical time for FCB, which had an estimated $410 million in OC capitalized billings in 2004, according to the Business Journal. Tracosas has been trying to revamp and grow the shop since coming on board in 2003.
Since then, FCB lost Kawasaki Motors Corp. USA, which was picked up by Newport Beach-based O’Leary and Partners, and won a few clients, such as San Diego’s Infommersion Inc. The shop also brought in a new executive creative director, Erich Funke, after Bill Cimino left.
Meanwhile, Y & R; has been making up for the loss of some big accounts earlier this year, such as part of Ford Motor Co.’s Jaguar Cars and Sony Electronics Inc. The shop had an estimated $475 million in OC billings last year.
Y & R; worked with its New York operations and creative resources from Chicago to nab the Hilton account. The Irvine office is expected to take the lead on managing the work.
“This win is very exciting but it does not signal any ‘new’ message about our agency,” Murphy said. “What it does signal is the talent and tenacity this team has shown for years. Our success is driven by two things,big ideas and big results. Period.”
Murphy said the shop will be adding some staff to handle the Hilton work. He declined to give specific numbers.
“Our first priority is always to reward and promote talent from within,” Murphy said.
Hilton’s new campaign is expected to break this fall, he said.
Y & R; also has been busy with its existing clients.
Murphy said the shop is under way with the global launch of the new Range Rover Sport for Ford’s Land Rover North America, which is part of the automaker’s Irvine-based Premier Automotive Group.
Y & R; also is handling the U.S. launch of Carlsbad-based Callaway Golf Co.’s new FT-3 driver and creating U.S. and global campaigns for several of Mattel Inc.’s brands, such as Hot Wheels, My Scene, Matchbox and Pictionary.
Ad Growth Slowing?
The outlook for 2005 ad spending doesn’t look as good as it did a while ago, according to a recent report in trade publication Advertising Age.
Ad spending trackers all recently cut their forecasts for 2005, Ad Age said.
New York-based TNS Media Intelligence predicted a 3.4% increase in 2005, down from a February forecast of 5.1%.
Robert Coen at Interpublic Group’s Universal McCann now is expecting a 5.7% jump, down from a December forecast of 6.5%. And Merrill Lynch & Co. cut its 4.8% forecast to 4.5%.
As for 2006? Coen and Merrill Lynch predict a slight uptick from advertising surrounding the Olympics and the mid-term U.S. election, Ad Age said. But TNS didn’t offer a guess.
Ad spending grew at a faster clip in 2004 than current forecasts, according to Ad Age.
So what does this mean for OC’s 50 biggest ad shops?
Last year, the group posted a 2% gain in OC capitalized billings and lagged behind the national ad spending trend, which grew 9.8% to $141 billion.
It’s still too early to tell how 2005 will finish, but OC’s ad execs are more optimistic than the national numbers look.
“The problem with ad industry forecasters is the narrow focus on advertising rather than a broader focus on total marketing programs,” said Jim Harrington, president of O’Leary and Partners. “There may be a shift away from traditional advertising, but many clients are investing in more non-traditional ways to reach and motivate their customers.”
That includes online marketing and direct mail.
As a result, “we believe total marketing spending is increasing,” and that’s reflected in the “continued strength of our clients’ businesses,” Harrington said.
“Marketing firms in Orange County should continue to thrive because this market has been on the forefront of integrated communications for a long time,” he said.
Good Vibrations
Aliso Viejo-based Epic Brand Communications is happy with work it recently did for client Zonare Medical Systems.
The OC shop helped mountain View-based Zonare get its name out and promote a new ultrasound machine, which earned its client some industry kudos.
Zonare’s market awareness level, positive perception, and business leads generated from the campaign easily exceeded its goals, said Mark Miller, Zonare vice president of sales and marketing.
The “strategic positioning” of a company is the “critical first step,” said Epic principal Steve Johnson.
The OC shop said its business doubled in 2004, and it is “on track to do the same in 2005,” Johnson said.
