KEY POINTS:
Y&R Advertising is looking at layoffs after losing the Top 10 advertising account for Noel Leeming Group, including Bond & Bond.
The electronics and appliance retailer ended several months of protracted negotiations yesterday saying that its account - with New Zealand's ninth-highest advertising expenditure on media - had been awarded to rival agency DraftFCB.
After discounting, it is believed it will spend around $14 million on media space for its ads, with DraftFCB taking a significant commission. With the returns from producing advertisements, the business is believed to be worth around $8 million to DraftFCB. However, it is believed that Noel Leeming secured a reduction in commission as part of the change.
Yesterday Y&R's managing director, Jon Ramage, said it was a big loss for the agency, which has been enjoying a long period of growth. Y&R held the account for eight years but withdrew from the pitch last year when it became clear the company was looking for a change.
It re-entered the race when Noel Leeming appointed a new chief executive, Andrew Dutkiewicz, but yesterday he awarded the contract to DraftFCB.
Ogilvy Advertising was also in the final pitch, it is understood.
Noel Leeming is a significant win for DraftFCB, which has become a major force in retail advertising.
The sector is notoriously demanding, but it is coveted by advertising agencies because production work making high-volume print advertising traditionally offers good margins.
DraftFCB also has the advertising account for Foodstuffs Auckland, Mitre 10 and Whitcoulls.
The win will be particularly welcomed by DraftFCB's parent company, Interpublic Group, whose other New Zealand advertising agencies McCann Erickson and Lowe have gone through tough times.
McCann Erickson was folded into DraftFCB and the direct marketing operation Draft, which had been a part of the Lowe agency, was shifted to FCB recently.
Lowe gave up trying to hold on to the Lotteries Commission account and was later dropped by Vodafone.
DraftFCB insists there are there are no moves to merge Lowe into DraftFCB.
