WPP's Y&R Bid Far Lower Than Rivals for U.S. Census Account
September 13 2016 - 2:09PM
Dow Jones News
By Alexandra Bruell
When WPP's Y&R announced earlier this year it had won the
coveted U.S. Census account, industry executives speculated that
the creative agency had come in with a low bid.
Now it's becoming clear just how low its price was.
A team led by Y&R submitted a proposal for the three-year
deal that would cost the government agency about $14 million, far
lower than the bids submitted by four other players, which ranged
from roughly $25 million to over $30 million, according to people
familiar with the matter.
The Census, which is readying a big advertising, media and
public relations campaign in its effort to collect data on U.S.
citizens for its 2020 report, is estimating a total budget of $415
million to cover its integrated communications contract, according
to request for proposals agencies received.
The project will include traditional and digital advertising,
media buying, public relations, social media and research, and data
and analytics, among other elements.
Y&R and the U.S Census declined to comment.
According to a document reviewed by The Wall Street Journal that
ranked agency fee proposals by price, Y&R's team came in the
least expensive, followed by teams led by Interpublic Group's
creative shop FCB, Omnicom Group's DDB, and IPG-owned McCann World
Group, as well an Accenture-led team that included people from
creative shop Droga5.
Y&R was at the top of the list on the "technical" ranking, a
measure of how well agencies could perform the work, according to
the document and people close to the process.
Y&R's low bid raised competitors' eyebrows, the people said.
Agencies often take on business at a discounted rate if they're
looking to create momentum during a slow period, or to do business
with a sexy brand. Typically, however, the low bid is only
incrementally lower than the others, according to people familiar
with agency reviews.
Still, with pricing pressure mounting -- from client procurement
departments asking agencies to wait longer for payment, to
electronic auctions asking agencies to bid down their rates -- some
agency executives wonder if lowball bidding will become more
commonplace.
"Agencies low-bid things all the time, but half as much is
pretty drastic," said Casey Burnett, founder of the agency search
consultancy The Burnett Collective. "Sometimes it's because the
agency wants the business as a marque account," while other times
"it's simply because they didn't understand the [scope of work].
Sometimes they hope to convince the client to pay more later."
It's not immediately clear what inspired Y&R's bid, or how
it plans on structuring the Census account. It's possible the
agency has set up a cost structure that will allow healthy profit
margins, despite its relatively low rate.
Y&R, which is no stranger to long-term government contracts,
won the multi-year Navy ad contract last year.
For its latest win, the WPP shop will need to pull in resources
from various agencies and engage in a hands-on effort that's unique
to the Census. Promoting the Census requires reaching people from
various cultures and ethnic backgrounds, and using different media
at a hyper-local level, from posters to flyers to mobile apps,
according to people familiar with the account.
"Effective and strategic communications with many diverse
audiences will be crucial, including everything from educating the
public about the process to maximizing response rates," according
to the Census's request for proposals.
An agency group that understands technology will also be crucial
to the Census project, according to the RFP.
Y&R has been in talks with PwC about a partnership on the
account, according to people familiar with the matter. Consulting
firms like Accenture, Deloitte and PWC have been investing in
digital marketing capabilities in the past few years and are now
even moving into the creative business, hoping to pitch their
technological know-how to marketers. Some ad agencies, meanwhile,
have dipped their toes in consulting.
Write to Alexandra Bruell at alexandra.bruell@wsj.com
(END) Dow Jones Newswires
September 13, 2016 14:54 ET (18:54 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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