Y&R May Battle to Keep Army Account

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After nearly 12 years of honorable service, Young & Rubicam Inc., New York, the diversified global marketing and communications agency, stepped into the new century with its $14 million U.S. Army account up for review - a development spurred in part by the armed services division's steady decline of recruits in the late 1990s.

However Y&R, which owns Young & Rubicam Advertising, Wunderman Cato Johnson, KnowledgeBase Marketing and others, said last week that previous reports claiming U.S. Army officials had already terminated the agency's contract were incorrect.

"It's in review, there is no question about that," said Bill Kelly, a managing partner at Y&R. "But the contract year doesn't end until July 31 of this year. And we are still deciding whether or not we'll be participating [in the review]."

Kelly, who acknowledged that consultants were helping to organize the review process, said he agreed with earlier reports that some of the Army's assignment may end up split between more than one agency. But he also noted, "We have some real issues in terms of process and timing, but we are hoping that the doors remain open." About one-third of Y&R's Army assignments, which are considered direct marketing related, are handled by its CRM services unit, Wunderman Cato Johnson, New York.

One of the consulting agencies involved in the shake-up is Jones-Lundin, Chicago, which is helping to find suitable agencies for the U.S. Army's review. But a spokesman at Jones-Lundin said it had just negotiated its contract less than two weeks ago and they are still "trying to figure out what's on the army's mind." And Y&R's subsidiary Black Kelly Scruggs & Healey is said to still be lobbying to keep the account where it is.

In the meantime, the Army is setting up a new inhouse marketing services group as part of an effort to help Army Secretary Louis Caldera better liaise with individuals who will manage the estimated $100 million worth of advertising the military division will place in the coming months. And at Y&R, Kelly agreed that placing more marketing services professionals within the Army itself was a good idea.

Whether the Army and Y&R are bickering over compensation levels is unclear. But the Army wants to move to a performance-based compensation package with Y&R, which Kelly said the agency is not opposed to.

He hinted other items still needed to be negotiated between the Army and Y&R and that timing pressures were challenging everyone involved.

Indeed, Edward H. Vick, chairman of Y&R, has been quoted as saying that the Army is moving too quickly - that it's trying to cultivate a civilian marketing staff, review its agency relationship, and launch a new national advertising and marketing campaign all at once. "This is like trying to change all the engines while the plane is flying," he said.

But a new battle plan is in order if the army is going to truly "be all that it can be"... with or without Y&R. Indeed, in 1999, the Army said it had a shortfall of about 6,000 recruits and that it is looking to find an additional 80,000 this year.

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