13986: There Goes The Neighborhood.

Adweek reported State Farm is consolidating its business with Omnicom. Like a not-so-good neighbor, State Farm is there—in an exclusive neighborhood.

State Farm Follows McDonald’s in Consolidating Its Ad Business With Omnicom

Company spent $726 million in 2016

By Patrick Coffee

State Farm is in the process of consolidating the majority of its marketing business with Omnicom, according to several parties with direct knowledge of the matter.

“State Farm works with many vendors to provide solutions to meet our customers’ needs,” said a company spokesperson regarding its agency roster. “Those relationships continue to evolve and are proprietary.”

Multiple individuals who spoke to Adweek regarding the business, however, agreed that State Farm would be transitioning to a new, Omnicom-focused approach with some notable exceptions involving agencies outside that organization.

The company, which is the United States’ largest insurance provider and one of its biggest advertisers, will at least partially follow the model set by McDonald’s, which awarded the lion’s share of its account to Omnicom in 2016 after a review that sparked debate over performance-based compensation requirements. The holding company then launched a dedicated agency called We Are Unlimited, and the client later shifted most of its regional marketing work to Zimmerman, another Omnicom agency.

At the time, holding company leaders positioned this development as the “agency of the future,” noting that We Are Unlimited included employees from Facebook, Google and the New York Times’ in-house content studio. DDB North America CEO Wendy Clark, who helped lead the McDonald’s pitch, also compared it to the “Flex” approach that allowed teams to collaborate across offices in that network.

Moving forward, DDB and OMD will retain their positions as lead creative and media agencies for the client. The former shop, which beat out FCB in a late 2015 brand refresh pitch, has a longstanding relationship with State Farm; chairman emeritus Keith Reinhard wrote the “Like a Good Neighbor” tagline in 1971 with Barry Manilow penning the jingle.

“We look forward to continuing to work with State Farm in 2018,” said a DDB spokesperson. “We are committed to advancing how we work collaboratively and creatively.” The representative declined to elaborate, and Wendy Clark herself did not respond to a related query. OMD deferred to the client for comment.

It is unclear at this time exactly which agencies will lose business as a result of this move. In addition to its smaller regional partners, State Farm currently works with several non-Omnicom shops including Translation, which has produced campaigns targeted at multicultural audiences; FCB, which retained the below-the-line portion of the business following the earlier review; and Weber Shandwick, which continues to serve as its PR agency of record.

An FCB spokesperson confirmed that the IPG shop remains on State Farm’s roster but declined to elaborate. A Translation representative deferred to the client for comment, but an agency insider told Adweek that Steve Stoute’s operation “will continue to be working with State Farm in 2018, and we are currently working through the details.” Weber Shandwick has not responded to a request for comment.

Sources at multiple agencies expressed uncertainty regarding the status of their long-term relationships with the client.

State Farm spent approximately $726 million on domestic paid media in 2016 and just over $300 million during the first half of 2017, according to Kantar Media. Its most recent campaign was a multiplatform collaboration with NBC involving that network’s hit prime time drama “This Is Us.”