KBS Has Lost Significant BMW Business

The following article appeared on AdAge on Monday, December 19th, 2016. Read the original here.

By Lindsay Stein, E.J. Schultz

BMW has made several agency changes in the U.S., bringing new shops aboard to handle duties once performed by MDC Partners’ KBS. KBS remains the luxury automaker’s lead creative agency, but the shop has recently lost significant assignments including social media, CRM and web development responsibilities.

The latest shift came late last week when BMW tapped Omnicom’s Critical Mass to handle web development following a competitive review. The finalists in the review included KBS, Huge, IBM and Meredith Xcelerated Marketing, according to people familiar with the review. Trudy Hardy, VP-marketing at BMW North America, confirmed the agency change on Monday.

The scope includes handling all of the needs of BMWUSA.com as well as supporting dealer web sites, she said. She declined to reveal budget figures. But people familiar with the matter said the web development account is worth between $10 to $15 million. Representatives from Critical Mass were not immediately available for comment.

“The website is still our virtual showroom to the world,” Ms. Hardy said. “We get close to 4 million visitors every single month. It’s important.” Part of the assignment includes evaluating the role that third-party sites are playing in the car-buying process, she said. BMW wants to examine best practices from outside the auto industry “just to make sure that we are keeping up with the needs of consumers because there are more real-time shoppers now,” Ms. Hardy said. Other priorities include ensuring the site is mobile-friendly.

Roth Ryan Hayes supported the review. The consulting shop, formerly Roth Associates, was acquired and renamed by Matt Ryan, former New York co-chairman and global brands president of Havas Worldwide, and Chris Hayes, most recently global chief marketing officer of Code and Theory, in April. Representatives declined to comment about the BMW review. KBS did not immediately provide comment.

The agency switch comes after KBS recently lost BMW’s social media business to Laundry Service and the CRM account to MDC’s Gale Partners. For CRM, Ms. Hardy said the auto marketer sought specialized data analytics capabilities for which she said Gale had an “outstanding competency.”

KBS emphasized its continuing role as creative agency of record.

“We are incredibly proud of the 10-years of work we’ve done on the BMW website, which has delivered increased leads every year and dozens of creative awards,” KBS global CEO Guy Hayward said in a statement. “We are excited for the next chapter as BMW’s creative AOR, a role in which we will continue to innovate and set the bar in the category.”

The changes suggest, however, that KBS is at risk of losing the creative account, which includes digital creative. People familiar with the matter have suggested that the creative account could go into review next spring or summer. But Ms. Hardy said that “we have not made a decision to put our above-the-line creative out to bid at this point.”

“KBS is a fabulous partner,” she added. “We have a wonderful relationship with them.” She noted that the agency’s workload also includes global projects via its service on a global brand council.

BMW spent $314.1 million on U.S. advertising in 2015, according to the Ad Age Datacenter.

In the third quarter of the year, MDC, which also owns shops including 72andSunny and Anomaly, reported a net loss of $33.5 million, compared to $8.6 million in the same period in 2015. The holding company has hired LionTree to review its financial and capital structure strategy and is in the process of reviewing options, including a potential sale.

(Photo credit: AdAge)