Thursday, December 06, 2012

10817: Honda Revving Review.

Advertising Age reported Honda is putting its $700 million U.S. account in review after 26 years with RPA. However, multicultural assignments—handled by Muse Communications and Orci—will not be affected. So there will be no Corporate Cultural Collusion for now. But wait and see if that changes should a new agency network emerge victorious. It also begs the question, if RPA is profiting with $700 million of business, what are Muse and Orci getting paid? It would be astonishing if both agencies combined collected $70 million from Honda. Hell, $7 million would be hard to imagine. One thing is certain: the amount is probably closer to $7.00 than $700 million.

Honda Throws $700 Million Creative, Media Account Into Review

Agency of 26 Years RPA to Defend Business as Opportunity Knocks for Rivals

By Alexandra Bruell

A huge auto-account shakeup is under way as American Honda Motor Co. throws its $700 million U.S. creative and media accounts into review for both its Honda and Acura brands, Ad Age has learned.

For 26 years, the automaker has worked with RPA on creative and U.S. media buying and planning, and the agency will participate in the review process. Honda told Ad Age the review is expected to be completed in the first quarter of 2013 and noted that it does not include multicultural assignments, which are handled by Muse Communications and Orci. Roth & Associates is supporting the reviews.

“Both the Honda and Acura brands are rolling out incredibly strong new products. In the face of a changing media landscape and a hyper-competitive marketplace, our challenge is to create dynamic marketing campaigns that connect and engage consumers with our products and our brands,” said Michael Accavitti, VP-national marketing operations, in a statement. “The review we have initiated will lead to a strong, long-term strategic plan for our brands.”

When he joined Honda last year, Mr. Accavitti told Automotive News there was no need to put RPA’s business up for review, saying an agency review would be, “completely unproductive and unnecessary.” He said, “RPA is an extension of the Honda family.”

As recently as August, he praised RPA’s Super Bowl work to Automotive News and said, “I am not a fan of airing differences with agencies in the press. If I have an issue with ad agency, I will call them.”

He added: “RPA has very capable individuals. We just needed to have a common understanding of what the objectives were, and they’ve been able to come up with good creative. Continuous improvement is the name of the game.”

RPA, whose roster is dominated by Honda—its website lists only a few other clients, including Intuit, La-Z-Boy and Farmer’s Insurance—referred calls for comment to the client.

Though potentially crushing news for RPA, the Honda review could mean opportunity knocking for media and creative shops to pitch the biggest auto review since GM reviewed its multibillion-dollar business last year.

According to the Ad Age DataCenter, the Honda brand spent $513.5 million on U.S. measured media in 2011, a 2.9% increase from 2010, while Acura spent $193 million, a 1.9% increase from 2010. Total U.S. marketing spending was $1.14 billion. Globally, the company reported ad expenses of $2.46 billion in the year ended March 2011. It was an improvement compared with the $2.12 billion it spent in 2010, but still less than the $3.01 billion it spent in 2009.

RPA is closely associated with the account, which it received in 1986 from Needham Harper after the “Big Bang” merger with Omnicom’s DDB (Volkswagen’s agency at the time) as part of a rollup with BBDO (then an agency for Chrysler).

Honda’s review comes on the heels of the automakers’ best ever November in terms of U.S. sales, according to Auto News.

American Honda sales this year are up 24% through November, although those numbers are skewed due to last year’s tsunami in Japan sharply crimping Honda’s inventories. The automaker just posted the best November U.S. sales in its history. The Honda and Acura brands should combine to finish the year selling around 1.4 million units in the U.S.

But Honda has grander volume aspirations. Honda Motor CEO Takanobu Ito wants Honda’s North American sales to increase to 2 million in the near term from 1.7 million units presently. Former American Honda sales boss Dick Colliver had a similar goal for the U.S. sales arm in the early 2000s, and never came close—sales peaked at 1.55 million units in 2007 before the recession took down the industry.

Contributing: Mark Rechtin, Automotive News,

No comments: