Wachovia just awarded its roughly $150 million advertising account to Ogilvy & Mather, a division of UK-based ad giant WPP. Wachovia has been looking for a new agency since the spring, ready to leave a division of Interpublic Group to update its brand.
But now Wachovia is in a period of total flux, with its debt soaring on WaMus failure, the bank is in peril.
So with WBstock plummeting why is now the time for the bank to announce it's shifting its mega ad-spend to a new agency? Sure, Wachovia is under big pressure to inspire confidence in its customers, reassuring them that they should keep their money where it is.
But do investors really want to see that Wachovia is moving forward with its business as usual from last spring? Wachovia must be evaluating its marketing spend, figuring out where it can't afford to skimp, and where it should pull back. It seems it would make more sense for the bank to focus on its reevaluation rather than shifting a $150 million account in this perilous time.
Update--Response From Wachovia: I just got off the phone with a Wachovia representative, who called me to give more context. The news about them switching their advertising spend to a new account leaked out before they had time to formulate a press release and explain why this move makes sense for the bank at this time. Perhaps most importantly, Wachovia says switching to this new agency will allow them to become more efficient.
Previously they had several agency relationships, working with Mullen for traditional ads, Carat for online ads. Now their entire ad spend will be under a single company, Ogilvy, which will be able to bring in its sister companies for more niche projects. But having everything under a single umbrella should help avoid redundancies. Wachovia's spokesperson also said that tough they began the process of finding a new agency back in May, before the current "environment", they thought it important to still move forward, as they hadn't reviewed their agency relationship since 2001. And as I mentioned above, this is of course a key time to define their brand and drive their business.
What about the key issue of the amount of spending? The bank wouldn't make any official statements, but it did say that given the current environment it would expect its overall advertising spend would decrease next year vs. this year. (For those unfamiliar with the advertising world, most of the ad spending for this year is already locked in).
The spokesperson said "we're preparing for our future." No kidding. The question is, in 2009, what the banking landscape will look like, and how much the company will have to spend to reassure investors, vs. how much it'll have to save to protect itself.
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