Sumita Vaid

LG splits business between McCann-Erickson and O&M; may look for AOR

The total size of the business is estimated at Rs 75 crore and the company has "divided the business equally" between the two agencies

Putting an end to weeks of speculation, consumer electronics company LG Electronics India Ltd (LGEIL) has split its advertising account between McCann-Erickson and O&M, Delhi. Confirming the move, Anil Arora, head, marketing, LGEIL, told agencyfaqs!, "We have empanelled O&M and McCann-Erickson. The Rs 75-crore business is going to be equally divided between the two."

Post the realignment, the LGEIL portfolio will be divided along the following lines. While McCann-Erickson will handle the products broadly clubbed under Digital Display Media (comprising colour televisions, audio and plasma display products), O&M has got the Digital Appliances Company (in other words, home appliances) business comprising washing machines, microwave ovens, air-conditioners and refrigerators.

This, in essence, means Lowe, Rediffusion DY&R and Capital Advertising, the three agencies handling LGEIL's advertising business till recently, are no longer on board. Stating that the company has amicably parted ways with these three (LG Mobile Handset Company's CDMA business continues to be with Capital), Arora added, "LG is what it is today because of these three agencies."

Prior to the current arrangement, Lowe was handling CTVs, mircowave ovens,air-conditioners, IT and DVD audio systems. Rediffusion DY&R had washing machines, while Capital Advertising had refrigerators (frost-free and direct-cool) and DVD video players. Excluding the promotional budget, the size of the business with Lowe was to the tune of Rs 40-45 crore, Rediffusion's billings amounted to Rs 7-8 crore and the business with Capital Advertising was around Rs 10 crore.

For the record, the GSM mobile phone business of LG was recently assigned to rmg david. Another important issue that has come to light is that while the media duties of LGEIL are with Initiative Media, the company plans to scout for an AOR in the next stage.

While LG reviews its agency alignment every year, the latest reshuffle assumes great significance given the ambitious business plans of the company. "This year, the company hopes to achieve a turnover of Rs 4,500 crore and the target set for the next calendar year is Rs 5,500 crore. Which means we are looking at a growth of Rs 1,000 crore in one year. In that context, advertising is of critical importance," Arora told agencyfaqs! in a recent interview.

An interesting thing about the LG pitch is both the new agencies - O&M and McCann-Erickson - have conflicting businesses. While O&M has Electrolux (and, till recently, Onida's CTV, DVD and home theatre systems businesses, which have subsequently been ‘parked' with Lemon Communications), McCann-Erickson handles National Panasonic, comprising audio, colour televisions, home theatre systems and camcorders. Electrolux has already called for a pitch (Electrolux calls for a pitch, agencyfaqs!, October 29) and newspaper reports suggest Onida businesses with Lemon are also up for grabs.

When National Panasonic was contacted, H Shivarama Krishnan, head, corporate brand management, National Panasonic, told agencyfaqs!, "McCann-Erickson has discussed the matter with us. However, at the moment nothing is decided; we need to discuss the issue internally. Things would be clearer in the coming days."

© 2003 agencyfaqs!

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