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McCann-Erickson Dropped as Ad Agency For Winston, Camel Cigarettes

July 28, 1989

NEW YORK (AP) _ In a move to streamline its marketing efforts, R.J. Reynolds Tobacco Co. fired McCann-Erickson as the advertising agency for its Winston and Camel cigarette brands in the United States.

The tobacco company, based in Winston-Salem, N.C., said Thursday it was assigning the two brands to two agencies that already handle other domestic cigarette advertising assignments for Reynolds.

FCB-Leber Katz Partners, the New York-based agency that handles advertising for Reynolds’ Salem and Vantage brands, has been assigned the Winston brand.

Young & Rubicam, another New York agency which handles the More and Now accounts, has been assigned the Camel brand. The changes are effective Oct. 30.

The dismissal came as a surprise to McCann-Erickson, a New York-based agency that also creates ads for Coca-Cola Co. and American Telephone & Telegraph Co. Agency insiders said Reynolds never told the agency it was reviewing the brand assignments before telling them of the decision Wednesday.

But Peter J. Hoult, executive vice president of marketing for Reynolds, said the consolidation of advertising business ″will allow us to streamline our marketing efforts and to more efficiently meet our overall objective of strengthening our cigarette business.″

The company refused to disclose how much it spends on advertising either brand, but one industry source said that advertising spending in the first quarter would extrapolate to about $45 million for the year. Another source, however, said the company spent twice that much on the two brands in 1988.

While the brand reassignments came as a surprise to the agencies, one advertising executive said changes were expected in the wake of the massive $24.5 billion leveraged buyout completed earlier this year of Reynolds’ parent, RJR Nabisco Inc. The buyout by the New York investment house Kohlberg Kravis Roberts & Co. left RJR with huge debts and new management.

Betsy Annese, a spokeswomen for Reynolds Tobacco, said the ad agency shift ″has nothing to do with the LBO.″

The Winston brand has been losing ground in the battle for market share in the cigarette business. McCann-Erickson got the Winston assignment in 1985 and Winston’s market share has since slipped to 10.4 percent from 11.2 percent.

Each percent of market share is worth about $366 million in retail sales, Ms. Annese said.

McCann’s most recent campaign approach pitched Winston’s ″Winning Taste.″

McCann developed a hip ″New Joe″ camel figure with the theme ″Smooth Character″ for Camel last year, but the brand has been mired for the past five years at 4.4 percent to 4.5 percent of the market. McCann won the Camel assignment in 1983.

McCann continues to handle foreign cigarette advertising assignments for Reynolds and handles its domestic direct marketing. In addition, McCann has advertising responsibilities for other RJR divisions, including Ritz crackers and Wheat Thins and Del Monte canned fruits.

McCann-Erickson’s total billings amounted to $675 million at the end of 1988.

FCB-Leber Katz Partners, a unit of Foote Cone & Belding Communications, has had the Vantage ad assignment since the cigarette was introduced 20 years ago. It received Salem in 1986.

Young & Rubicam has handled Now and More cigarette advertising since 1986, and has been running test market advertising for Chelsea cigarettes since April.

Reynolds also has a third ad agency, Long Haymes & Carr, which is responsible for Doral, Magna and the company’s special events advertising.

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