Verizon Communications’ surprise consolidation of its estimated $2.5 billion marketing account puts its Verizon Wireless division at the fore of the parent company’s marketing strategy.
It also signals the power—and the thinking—of chief marketing officer John Stratton, who moved up from Verizon Wireless in January to take on marketing for the full company.
Verizon announced on Friday that it will consolidate all its marketing with 10 agencies, five of them within McCann Worldgroup, to save money and give the brand a consistent image across all its divisions.
Stratton is behind the reassignment.
He had been vice president-chief marketing officer of Verizon Wireless before taking charge of all of Verizon’s marketing on Jan. 1, when he was promoted to the new post of executive vice president-chief marketing officer for parent Verizon. Stratton worked with McCann Erickson and Momentum at Verizon Wireless.
“Fewer agencies will allow us to leverage key creative teams and develop one immediately identifiable Verizon brand,” Stratton said in a statement, calling the consolidation “an essential step” in keeping Verizon on top of the telecommunications industry.
The 10 agencies pick up work for parent Verizon as well as its Verizon Business and Verizon Wireless divisions. McCann Erickson wins advertising, while Momentum Worldwide becomes agency of record for events and sponsorships, expanding on project work it’s been handling for Verizon Wireless.
Verizon didn’t conduct a review, but it knows McCann well: McCann Erickson is lead agency on Verizon Wireless.
The consolidation pulls business away from about 10 agencies, including two promo shops: Draftfcb (direct and promotions) and Euro RSCG (retail). Other agencies losing business are lead ad agency mcgarrybowen, events shop IMG, digital agency Avenue A, and ethnic marketing shops La Agencia De Orci & Asociados and Burrell Communications (PROMO Xtra, May 18, 2007).
Verizon’s divisions will continue to handle marketing independently, but “this new advertising team will help us respond to the market faster because we are sharing more of the basic behind the scenes resources,” Stratton said.
Verizon spent $1.95 billion on measured media in 2006, according to TNS Media Intelligence. That doesn’t include an estimated $500 million in consumer promotions, events and direct-marketing work. Ad spending alone for January and February this year was nearly $300 million, TNS reports.
Other McCann agencies that pick up business are MRM (direct marketing) and Universal McCann (media planning); RGA keeps digital design work. The remainder of assignments go to: Publicis Groupe’s Zenith (media buying) and Moxie (online); WPP Group’s Landor Associates (branding); and indy shops Global Hue and Ad Asia (both multi-cultural).
The loss could be a double blow to Draftfcb: Qwest Communications, a client of Draftfcb’s new spin off agency Rivet, put its $95 million account into review last month. Qwest had been a client of Foote, Cone & Belding, which merged with Draft in June 2006. Rivet may not be asked to pitch, according to news reports.
Draftfcb is still trying to recover its footing after losing Wal-Mart’s $570 million marquee account last October, just four months after announcing its mega-merger. The agency picked up Kmart’s $225 million ad account last month (PROMO Xtra, April 19, 2007). First work will be back-to-school advertising and promotions, based on former agency Grey Worldwide’s creative plan. Other wins in the past year include Kraft Lunchables, Electronic Arts and Brown-Forman’s Casa Herradura brands.
Draftfcb will keep its Verizon team in place until mid-August. Some staffers may shift to fill the 200 or so job openings in Draftfcb’s New York and Chicago offices, or transfer to with the Verizon business, since McCann and Draftfcb are both owned by Interpublic Group of Cos.
Draftfcb has worked on Verizon for 14 years, including direct marketing and promotions as well as some advertising. Its most recent ads, themed “It’s On,” broke in February with broadcast and print ads touting Verizon’s reliability. The ads show customers in different situations—home alone with the kids, or when the lights go out—and end with Verizon’s tagline “It’s the network.”
“We are obviously disappointed that the new management team at Verizon has chosen to consolidate its business elsewhere,” said Draftfcb spokesperson Wally Petersen. “Throughout our 14-year relationship, our work has consistently delivered stellar results. We wish Verizon continued success, and will do everything we can to ensure a smooth transition.”
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