Industry Balance
DraftWorldwide in November hired 14 former executives from Simon Marketing to staff a new in-house unit called Premium Surge.
The move gives Chicago-based Draft in-house premium design and sourcing capabilities for the first time. “We had been looking into the creation of a premium company for more than a year,” says Surge at DraftWorldwide president Lee Hill. “It’s an offering we have been wanting to make available to our current clients and some of our prospective clients.”
Simon’s loss of the McDonald’s account in August after the infamous game scandal (October 2001 PROMO) “created a unique opportunity for us” to staff the proposed division immediately, says DraftWorldwide president Jordan Rednor.
Although Hill says Draft “didn’t create this company to go after any single client,” the agency certainly will look to use Premium Surge to deepen its relationship with Burger King, Miami, the marquee account it won in January 2001 (March 2001 PROMO).
Los Angeles-based Equity Marketing, BK’s premiums agency of record, expects revenues from the account to “show substantial growth” in 2002, according to recent financial statements. Long-time BK shop Alcone Marketing Group, Irvine, CA, which also handled premiums work, did not return calls seeking comment on media reports that its relationship with the QSR has ended.
Burger King’s agency roster is far from stable. The chain abruptly dismissed McCann-Erickson Worldwide as lead ad shop in October, less than nine months after the New York City agency was named to conclude a lengthy review. BK tapped Los Angeles-based boutique Amoeba to lead creative strategy and later signed on McCaffery Ratner Gottlieb & Lane, NYC, for several key assignments.
‘Doubt’ at Simon
Meanwhile, the McDonald’s fallout continued at Los Angeles-based Simon, which in November announced plans to cut 215 more jobs and said “there is substantial doubt about the company’s ability to continue as a going concern.”
That news came as part of the company’s third-quarter financial statements, which showed net sales down 46 percent to $311.4 million in the first nine months of 2001. What made the decline even worse was that 80 percent of those net sales came from work with Oak Brook, IL-based McDonald’s — which dumped the agency after the FBI arrested the shop’s security officer, Jerome Jacobson, for allegedly rigging the chain’s instant-win games. Another eight percent of net sales came from erstwhile client Philip Morris, which terminated its contract soon after.
The latest round of job cuts, which followed the previously announced termination of 177 employees, pared Simon’s worldwide operation to about 90 employees, the company said.
In related news, Simon signed a retention agreement with ceo Allan Brown which ostensibly pays him $200,000 per month (through “forgiven debt” on a $2 million loan) for as long as he remains at the company’s helm. Brown will receive an additional $750,000 payment upon termination of his contract, according to documents filed with the Securities & Exchange Commission.
Meanwhile, McDonald’s quietly shifted most of the work formerly handled by Simon to Creata Promotion. The Australia-based shop hired Sandy Silver, who managed the McD account at Simon, to open an office in Oak Brook. Frankel, which takes care of the chain’s P-O-P, may also see more work, according to sources.
