What kept McCann away from LG’s Rs 50 crore?

Early this week, LG Electronics consolidated its consumer electronics and IT businesss with Lowe. McCann, which used to handle around 80 per cent of this Rs 50 crore business, deliberately kept away from fighting it out with Lowe.

Santosh Desai, president, McCann-Erickson, India, says, “We have decided to stay away from clients such as LG. It is becoming a common practice these days that whenever there is a change in management, there is a review of the advertising agency without any adequate reasons being proffered.”

He adds, “Particularly in LG’s case, this came as a shock to us. We have been getting positive reviews from LG. But all of a sudden, it decided to review its advertising duties.”

“As we were the incumbent agency, both parties could have sat across the table and amicably discussed any shortcomings. Instead, LG decided to call directly for a presentation, which we did not appreciate,” explains Desai.

Desai further says, “Now, we have decided that McCann-Erickson will stand against such frequent and arbitrary calling for pitches.”

He explains, “It’s easy to invite agencies for a pitch and many marketing divisions seem to be thriving on this concept. There are times when a call for a pitch is made, presentations happen and then one hears nothing from the company.”

Desai clarifies: “We do not intend to accuse LG of anything. This may be LG’s way of doing things, but we saw this to be unfair. That is why we consciously decided to stay away from the entire pitch process.’

“To put it in simple words: LG exercised its right to call for a pitch, we exercised our right to stay away from it,” concludes Desai.

Deba Ghoshal, head, brand management and product planning, LG Electronics, is not ready to consider the entire episode as a pitch. He says, “I would not call it a pitch. We invited only two agencies and that too the two agencies that were already working for us.”

He adds, “We were looking towards integrating the business, which meant that there would be an incumbent agency.”

“Our decision was based purely on the fact that we got the strategic orientation that we were seeking to integrate the entire consumer electronics and IT category.”

Ghoshal says, “We respect McCann’s call to not be a part of the presentation.”

To put things in perspective, the action on LG’s advertising firmament continued this year when it consolidated its creative duties for its consumer electronics and IT business with Lowe. In the beginning of 2004, McCann-Erickson was awarded the creative duties for TV, audio, plasma display products and the IT business. In a later reshuffle, it got the washing machine business as well. Prior to that, Lowe was handling the CTVs, IT and DVD audio systems, while Capital Advertising was handling the DVD video players.

In a similar move, some two months ago, LG Home Appliances consolidated its creative duties with Capital Advertising. Capital got the air conditioners and microwave ovens business from O&M, refrigerators from Lowe and washing machines from McCann-Erickson.

In fact, Capital had worked earlier on LG microwave ovens and refrigerators; the refrigerator business moved to Capital from Lowe in 2001.

The washing machine business was with Lowe in 2001, but then it was moved to O&M, and then to McCann-Erickson in 2004. Now, it is with Capital.

© 2006 agencyfaqs!