Looking to get more bang for its ad buck, Vons Co. on Tuesday divided its $25-million ad business between three Los Angeles ad firms that will create and place spots for the chain.
DDB Needham will create ads for all Vons grocery stores, while Saatchi & Saatchi DFS will devise ads for its more upscale Pavilions stores. Meanwhile, Western International Media will place the advertisements on TV, radio and in the print media.
Although Vons officials insist that the move is strategic--and not primarily aimed at cutting ad costs--it is similar to actions taken by a growing number of big advertisers. Advertisers are relying on agencies for their marketing expertise and on media buying firms for their ability to buy ad time for the lowest possible price.
"As we went through the agency search, it became increasingly apparent that it would be a good thing to split the business," said Dennis K. Eck, vice chairman at Arcadia-based Vons. Vons finds itself in a position of strength. Among Southern California supermarkets, it posted the best growth in the second quarter when its sales were up 3.2% compared to the same period a year ago. And with the continued downturn in the ad business, Vons was able to divide its ad business without hearing complaints from any of the agencies involved. With this move, Vons has increased its leverage with the agencies because each will be striving to do a better job than the other.
Of the firms selected on Tuesday, the big winner would appear to be Western International. The media buying giant continues to swallow business from Los Angeles-area advertisers. But Dennis Holt, president of Western, said his firm will be reporting to Vons' agencies. "Our whole thinking is to go after the agencies" and not to compete with them, Holt said.
Meanwhile, the new agencies will work on a fee basis that will be about half of the 15% commissions ad firms have traditionally earned for creating and placing ads for clients.
DDB Needham plans few changes to the Vons advertising. "What we'll be doing is extending an already successful strategy," said Dave Park, president of DDB Needham/Los Angeles. Spokesman Bill Davila will continue to appear in Vons ads, he said, and the agency will hire up to eight employees to create the ads.
Officials at Saatchi, which won the Pavilions portion of the business, said they were surprised at the win. "Splitting the account was something that was never even discussed," said Joe Cronin, president of Saatchi's Torrance office. But Cronin said it is a good idea.
Vons ads were formerly handled by the Los Angeles office of J. Walter Thompson, which was fired in June.