The demise of Coca-Cola’s in-house agency, Edge Creative, will trigger a fierce battle in the US for its $180m (£113m) a year business (MW April 6). But as new chief executive Doug Daft acts out his “think local, act local” mantra, the fight is likely to spread to all of Coke’s other territories.
The soft drinks giant has an annual marketing budget of £1bn and a seven-strong agency roster comprising Leo Burnett, Bartle Bogle Hegarty, D’Arcy, Doner, McCann-Erickson, Publicis and Wieden & Kennedy.
Coke has yet to decide which agency will produce its new ad campaign, scheduled for the summer, although sources say the battle will be between Burnett and McCann.
The company stunned the ad industry in 1992 when it pulled its creative business from McCann and handed it to Edge, then called the Creative Artists Agency and run by Hollywood talent scout Michael Ovitz. The move was instigated by Roberto Goizueta, who was Coke’s chief executive from the early Eighties until he died in 1997.
Observers expected the switch in house to be copied by the Procter & Gambles of this world but, apart from a few exceptions, such as Gap, the concept did not really take off, although some believe it pushed many companies to buy in their services from a range of suppliers.
Edge’s work was credited in part with turning Coca-Cola into the giant it is today. Under Goizueta, Coke’s value grew from $4.5bn (£2.8bn) in the early Eighties to more than $145bn (£89bn) in 1997.
The agency has been at the forefront of all Coke’s advertising, including “Always” and the new “Enjoy” strategy, on which it worked with McCann, for the past eight years. It also devised the popular polar bear imagery.
One Coke insider says: “Edge had a very easy time working for Coke. Its executives had direct access to Goizueta: if marketing chief Sergio Zyman didn’t like their ideas, they’d get on the phone to the top man and he’d give them the go-ahead.”
But with Daft reappraising the whole company’s operation after the troubled reign of his predecessor, Doug Ivestor, Edge executives were starting to feel the heat. The source adds: “Edge bosses have made a lot of money out of Coke and may have jumped before they were pushed.”
Whatever the reason behind the move, it is likely to accelerate the devolution of power from Atlanta to the regions. Daft has been shouting his “local, local” philosophy from the rooftops and although observers doubt that Atlanta will ever give up its stronghold, publicly Coke must be seen to be acting.
One of the first fruits of this strategy in the UK is the current Diet Coke ad campaign, commissioned by Coca-Cola GB marketing director Andrew Harrison and made by Wieden & Kennedy in London. But the ads, which were shot in the UK and are supposed to represent down-to-earth British culture, are steeped in Americana. The first British actor to appear in a Coke ad never opens his mouth, and the people who do talk are shamelessly American.
Harrison says: “The ads tap into the British culture of taking breaks, even skiving, at work. This down-to-earth approach appeals to British consumers, but they don’t show a typical British office because that setting is not exactly aspirational.”
So is Coke able, or even willing, to discard its American heritage and let local agencies have more say? After all, its “Eat football, sleep football, drink Coca-Cola” ads have been very successful in helping the company gain “ownership” of football – a minority sport in the US.
The agencies Marketing Week spoke to had already received an edict from Coke forbidding them to speak to anyone about Edge’s demise, but privately they are hoping the new strategy will give them extra scope.
One source comments: “Coke has relied on Americana for decades and it has been very frustrating for local agencies to have to adopt US ads. Production-wise, they are second to none, but they are very formulaic and, frankly, creatively inept.
“There is a feeling, especially in the UK, that we could do a much better job. We hope this move will lead to more flexibility, but we are not holding our breath.”
Another agency insider comments: “The days of Atlanta template ads are over. Local marketing departments are likely to have greater scope to produce ads but it will be freedom only up to a point. Pan-European agencies will still have to get their work approved by the Atlanta high command. But at least they are talking about it: that in itself is a major breakthrough.”
Yet, with the brand so inextricably linked to the American dream, it would be a brave local marketing director who tried to break that tie and try something new. With the axe poised over 6,000 jobs, who would risk putting their head on the block?