American Honda Motor Co. unexpectedly shook up its advertising mix on Tuesday by shifting its Acura automobile division's $150-million brand and regional advertising work to Santa Monica-based Rubin Postaer & Associates from Suissa Miller Advertising of Los Angeles. Rubin Postaer, which already holds a $350-million ad account for the Honda division, will create a "separate and distinct" advertising campaign for Acura, Honda executives said.
Honda tied the dramatic move, which occurred without a traditional agency review, to ongoing cost cutting at the Torrance-based company that sells Hondas and upscale Acura automobiles. Such competitors as Infiniti and Lexus have enjoyed stronger sales in recent months than Acura, and Honda has been quietly blending business development units within Honda and Acura to improve operating margins.
"After a painstaking analysis, we identified agency consolidation as an important opportunity for our company to continue our quality marketing programs, with improved cost efficiencies," Tom Elliott, Honda's executive vice president of automobile operations, said in a statement.
The shift represents a huge victory for Rubin Postaer, which has held the Honda brand advertising account for 25 years. "We really had no knowledge of it--we were advised today," said Rubin Postaer President and Chief Executive Gerrold Rubin. The agency, with 400 employees and $550 million in 1998 billings, will add about 100 employees as it takes on Acura.
Executives at Suissa Miller didn't return telephone calls on Tuesday, but observers described the Acura loss as a crushing blow for an upstart agency that fought hard during a late 1996 agency review in which Rubin Postaer, with its Honda connections, was viewed as the front-runner.
Honda executives denied that the move was prompted by dissatisfaction with Suissa Miller's work: "This was not an easy decision," Eric Conn, Honda's assistant vice president of national automobile advertising, said in a statement. "Suissa Miller has helped rebuild Acura's image as an upscale luxury brand."
Industry analysts, though, noted that Acura's recent sales gains have failed to match those logged by such upscale competitors as Infiniti and Lexus. During the first six months of this year, Lexus sales rose 31.4% and Infiniti recorded a 21.3% gain, both helped by popular sport-utility vehicles. Acura, which doesn't have a true luxury SUV, posted an 11% increase.
Rubin said that his agency would consider hiring some employees from Suissa Miller, where layoffs are anticipated. "One of the great vulnerabilities in this economy right now is finding talented, qualified people," Rubin said. "It's a big problem, particularly in Southern California, where there are so many automobile companies."