Kia Motors Ousts Agency in Surprise Move After Praising Its Humorous Ad Campaign

Kia Motors America said Wednesday it has fired San Francisco’s Goldberg Moser O’Neill as its advertising agency--a surprise move just weeks after the car maker publicly praised GMO for helping raise its public profile with an ongoing series of humorous ads.

Kia said it already is negotiating with another agency, which it did not name, and hopes to seal a deal in the next few weeks.

The official reason for firing GMO--that Kia doesn’t believe the independent agency has the resources to handle its growing account--drew a heated response from GMO Chairman Fred Goldberg.

“We have six accounts that are larger than Kia, so we are doing just fine delivering the goods,” Goldberg said. “I really think this is an issue of screwing down fees.”

Goldberg said GMO has lowered its fees for Kia for the last three years--it received $6 million on estimated billings of $75 million this year--while increasing the amount of work it has done. “We just signed this year’s [1999] contract after negotiating with them for 18 months,” he said. “That should say something” about the situation.

Kia Motors was one of the South Korean companies bankrupted last year in that country’s economic turmoil. It was purchased by rival Hyundai Motors, which is looking for ways to economize by sharing some costs with Kia.

Kia would not identify the prospective new agency, but speculation centers on Bates USA West, whose Irvine office already handles ad chores for Kia’s corporate cousin, Hyundai Motor America.

But one ad industry executive discounted speculation about Bates taking on Kia. It also would seem to contradict previous statements by Hyundai that its marketing would remain separate from Kia’s.

Tim Hart, president and chief executive of Bates USA West in Irvine, declined comment.

Observers noted that there are few agency networks with offices on the West Coast that do not already have a car account.

There was speculation that DDB Needham in Los Angeles, which has done some marketing work for Kia, might be a candidate. But Dave Park, president of that office, said he was not in talks with Kia. DDB Needham creates ads for The Times.

Kia executives were not available for comment Wednesday but said in a statement that it was not dissatisfied with GMO.

“Kia sales are 61% above last year, so the decision to terminate GMO was not a result of slow sales or bad creative; it was done for other business reasons,” said Dick Macedo, Kia’s executive vice president of marketing and sales.

He said Kia’s U.S. advertising budget is expected to increase to about $100 million by 2001.

Kia’s ads have drawn controversy but have helped out the once-obscure auto maker on consumers’ shopping lists. A recent ad poking fun at Y2K fears is typical of Kia’s style of humor under GMO. It said Y2K means “Say Yes to Kia.”

Goldberg said GMO doesn’t expect the loss of Kia to be a major financial blow or to affect employment. The agency has signed more than $200 million in new accounts this year and is hiring to fill more than 30 new positions, he said.

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Times staff writer Greg Johnson contributed to this report.