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Burger King Gives Ayer Ad Agency a Real Whopper

September 29, 1987|BRUCE HOROVITZ | Times Staff Writer

For the troubled ad firm J. Walter Thompson, fast times became past times on Monday. The agency that created the "fast food for fast times" slogan for Burger King lost the $200-million account to New York rival N W Ayer.

The move represents one of the largest advertising industry account switches in history. And other Thompson clients--including the $25-million Goodyear Tire & Rubber Co. account and the $42-million Sears Discover Card Services business----recently announced that they, too, are looking at other ad agencies.

For Ayer, however, which has U.S. billings of $850 million and barely ranks among the nation's top 20 ad agencies, the addition of Burger King is clearly a Whopper. Ayer, which is best known for its "Be All You Can Be" campaign for the Army, lost that account earlier this year amid allegations of bid-rigging among subcontractors. "They may have lost the Army," said one ad industry analyst, "but the Burger King account is hardly K.P. duty."

In its new advertising, Ayer will hit hard on Burger King's claim to flame--flame broiling, that is. "We'll express the notion of the old slogan 'Have it your way,' but in a new way that involves the customer," said Jerry J. Siano, vice chairman of Ayer. The new advertising--which Siano said would focus on hamburgers--is not scheduled to be aired until February.

But industry analysts say that the loss of Burger King business does not spell doom for Thompson--even though it represented nearly one-fifth of Thompson's U.S. revenue. The loss was anticipated early this summer, when Thompson's parent company, JWT Group, became embroiled in a much-publicized takeover battle with the British-owned marketing firm WPP Group. WPP purchased Thompson in June for $566 million.

Now, some analysts say the loss of Burger King account may actually help improve the profit picture at the agency that still handles the $250 million in Ford Motor business and also creates advertising for Eastman Kodak and Miller Brewing.

"It ain't the end of the world" said Alan Gottesman, an analyst at the New York securities firm L. F. Rothschild, Unterberg, Towbin Inc. "Burger King is a very expensive account to service and probably did not produce the kind of revenues that are at par with the industry average."

Indeed, Thompson's revenue from the Burger King account was less than $20 million. "That's a lot less than most people think," said Steve Bowen, president of J. Walter Thompson U.S.A.

What's more, Thompson "expected to lose the account," said Joan L. Merlis, analyst at New York-based Salomon Bros. "It doesn't really put them in jeopardy with their other clients."

Created "Herb" Campaign

One such client, Discover Card, began putting out feelers for a new agency last month. "We're not jumping ship because the walls are cracking at Thompson," said an executive with Discover Card who asked not to be identified. "We just want to see if there's someone out there who can develop a better brand personality for us."

Burger King, a Miami-based subsidiary of Pillsbury Co., was Thompson's second-largest client. It was Thompson that created Burger King's often-ridiculed "Herb" ad campaign that featured a bespectacled nerd whose antics only hurt sales. With competition fierce, Burger King has reported flat sales over the past year, and in May the chain laid off 15% of its corporate work force.

Thompson's headaches have mirrored those of Burger King. Earlier this year, Thompson's largest client, Ford, yanked much of its overseas advertising--valued at $140 million--away from Thompson. And in July, Chevron U.S.A. took its $10-million Chevron brand gasoline account elsewhere.

"The industry will not have to shed too many tears for us," said Thompson's Bowen. "We'll be back on top again, soon." Indeed, Bowen said in an interview that Thompson is already talking with several fast-food companies about handling their advertising.

Advice for Ayer

A somber group of Thompson's top officials met in New York on Monday to try to determine how the loss will affect the agency--and to decide the number of Burger King account workers to lay off. Bowen said that figure would likely be fewer than 50.

He said that he is not bitter about losing the account that his agency held for 11 years, but Bowen did have some words of advice for Ayer. "Living up to expectations," he said, "will be the hardest thing of all."

N W Ayer--whose biggest account had been the $150-million American Telephone & Telegraph business--now expects to hire an estimated 60 workers to service the Burger King account.

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