Honda splits its advertising account among three firms
For more than a quarter of a century, the advertising agency Rubin Postaer & Associates of Santa Monica controlled the business of American Honda Motor Co.
On Monday, Honda shifted gears by announcing that it was splitting its huge advertising account among three agencies, ending one of the most closely watched reviews in the advertising industry.
RPA, which opened in 1986 to handle the Honda account, survived a brush with potential ruin by retaining responsibility to create advertisements for the nation’s fifth-largest auto company. However, the ad agency — the second largest in the Los Angeles region with more than 500 employees — lost two other sizable pieces of the Honda account.
The Torrance carmaker said it was turning over ad-buying functions for Honda and its luxury brand, Acura, to MediaVest in New York. Mullen, a well-regarded mid-size agency in Boston, landed the account to create commercials for Acura.
“We are confident that our new team of agencies will create dynamic marketing campaigns that connect and engage consumers with our products and our brands,” Michael Accavitti, American Honda’s vice president of national marketing operations, said in a statement.
Late last year, Honda decided to review its entire advertising account — more than $825 million in annual spending — and solicited proposals from various agencies. Honda’s decision to open the account put RPA’s executives on edge because incumbent agencies are typically forced to surrender an account if the client takes the dramatic step of putting it into review.
“Advertising has always been very competitive, and these account reviews are the ‘High Noon’ of the business, with agencies pulling together all of their firepower for these duels in the middle of the street,” said Kevin B. O’Neill, a veteran ad executive who now teaches at Syracuse University’s S.I. Newhouse School of Public Communications. “It’s enormously satisfying when you win and heartbreaking when you lose.”
It was unclear late Monday how much RPA would have to downsize after losing portions of the contract. Advertising agencies are famous for shedding hundreds of employees when they lose a substantial account. In addition to Honda, RPA’s clients include Farmers Insurance Group, ARCO AM/PM, La-Z-Boy Inc. and Las Vegas’ Mandalay Bay Resort & Casino.
“Losing this account would have [had] catastrophic effects” for RPA, O’Neill said. “It’s a great credit to RPA that they were able to hold onto the creative portion of the account.”
RPA on Monday celebrated the continuation of its decades-long association with Honda that began about 30 years ago when RPA’s founders, Gerry Rubin and Larry Postaer, worked on the Honda account at another advertising agency.
“We look forward to continuing to collaborate with American Honda,” RPA said in a statement. “We anticipate working closely with the other agencies that have been newly added to the American Honda roster.”
Honda said each agency would have dedicated work space at its Torrance offices. Mullen, which has an office in San Francisco, is expected to open one in Southern California. MediaVest will probably expand its presence in Los Angeles to focus on the Honda account.
Some veteran ad executives were surprised when Honda decided to open the account for review. RPA had won industry awards for its work, including producing one of the most talked-about Super Bowl commercials in 2012, “Matthew’s Day Off.” In that commercial, actor Matthew Broderick reprised his role in the 1986 film “Ferris Bueller’s Day Off,” but this time cavorted around L.A. in a Honda CR-V.
And Honda wasn’t experiencing declining sales, a key motivator for many corporations to switch ad firms.
American Honda was the fifth-largest seller of vehicles in the U.S. last year, trailing only the Big Three Detroit automakers and Toyota Motor Corp. Honda’s U.S. sales accelerated 24% to slightly more than 1.4 million vehicles in 2012 as it rebounded from inventory and production problems caused by the Japanese earthquake and tsunami in 2011. Honda and Acura account for about 1 in 10 cars sold in the U.S., according to research firm Autodata Corp.
But the company is ramping up operations to fend off competitors who might sideswipe their market share.
Honda hopes to boost sales of its 2013 Civic, and it plans to roll out a new Accord hybrid this year to better compete with similar vehicles from Toyota and Ford. Acura wants to showcase its RLX, its flagship luxury sedan, to compete with Lexus and Mercedes-Benz. The company also plans to launch a revamped Acura MDX sport utility vehicle.
Car companies collectively spend billions of dollars a year to produce commercials and buy time on various media platforms to enhance their image. And RPA isn’t the first longtime agency to lose a significant portion of a cherished car account. Nearly three years ago, the Detroit ad shop Campbell Ewald lost the Chevrolet account, which it had held for nearly 100 years.
Landing the Acura account is a coup for Mullen — which opened in 1970 and has created ads for Google Inc., JetBlue Airways Corp. and Adidas — and puts it in a new league.
“Agencies grow and prosper by bringing in small accounts and landing monster business like Honda,” said Chris Cakebread, an advertising professor at Boston University. “This is going to allow them to move into the big sphere. And Acura is a very sexy car account to have.”
Mullen President Alex Leikikh said in a statement that the company is “extremely proud to have the opportunity to represent, build and evolve the Acura brand.”
Advertising experts say that big accounts often go into play when a client wants to shake things up or hires new marketing executives. Nineteen months ago, Honda hired Accavitti, who had worked at Chrysler for a quarter of a century.
“Accounts very often come into review when a new chief marketing officer comes on board,” Cakebread said. “And the average tenure of a corporate CMO is something like 22 months, which increases the volatility of the advertising business.”
Times staff writer Jerry Hirsch contributed to this report.
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