AA takeover sparks major carve-up of £70m budget

The Automobile Association (AA) is set to slash its £70m-plus marketing and advertising budget following its takeover last week by venture capitalist companies CVC and Permira.

The Automobile Association (AA) is set to slash its &£70m-plus marketing and advertising budget following its takeover last week by venture capitalist companies CVC and Permira.

The principal casualty is set to be Rapier, which holds the lion’s share of the AA’s above- and below-the-line business.

Fellow roster agency M&C Saatchi is meanwhile pitching for the &£40m account for rival Direct Line (MW July 15).

The move follows the axing of seven board members, including AA financial services director Clare Salmon, and a restructure of the company into three separate businesses – road services, loans and insurance.

One source suggests that the budgets will be halved and another says: “They [CVC and Permira] are cutting anything that moves.”

The cut backs will also affect Manning Gottlieb OMD, which was appointed to handle the AA’s &£33m media planning and buying account in 2002 (MW November 14, 2002).

The company has confirmed that its three businesses will be responsible for their own advertising arrangements, but says that it is too early to comment on any changes. There will be no single person overseeing the AA brand communications function.

None of the agencies were available for comment as Marketing Week went to press.