Fallon ad agency loses Cadillac account

Fallon's great date with Cadillac is over.

The Minneapolis ad agency and the iconic American luxury vehicle maker have parted ways after a nearly three-year relationship, with Cadillac deciding to go in a different marketing direction.

Losing Cadillac is a stunning blow for Fallon, which once handled Porsche, performed award-winning work for BMW and resigned its account with Chrysler in 2010 to take on the General Motors opportunity.

The agency has publicly been circumspect in its reaction to the Cadillac news.

In a statement to the Star Tribune, Fallon CEO Mike Buchner said, "We are exceptionally proud of our Cadillac work and the phenomenal business results it achieved. The brand has momentum that it didn't have when we took on the account almost three years ago and that will serve Cadillac well as it moves forward."

However, in an internal memo to Fallon employees, Buchner said, "This is an outcome we do not deserve."

According to Advertising Age, which obtained a copy of the memo and which was confirmed by the Star Tribune, Buchner also wrote, "The fact of the matter is that we took a brand that was emerging from bankruptcy, gave it a differentiating positioning, brand identity and voice, and made Cadillac the fastest growing major car brand in the United States."

Cadillac awarded its $200 million plus advertising account last week to a three-agency team from the Interpublic Group. The agencies, Detroit-based Campbell Ewald, Boston-based Hill Holiday and London-based Lowe, formed a hybrid agency called Rogue to handle the Cadillac account.

John Purdy, an advertising and public relations professor at the University of St. Thomas, called the agency-client split "a sad day for Fallon and a sad day for the Minneapolis advertising community."

"It's good to have those marquee accounts, because it reflects on the whole market," Purdy said. "It hurts a bit."

Loss of a big account such as Cadillac often means layoffs in the advertising world, although Fallon has been mum on that topic.

"There's only one variable cost that you can address and that's people," said Purdy, an agency alumnus.

"It takes a lot of guts to be in it and stay in it," said Johnson.

She said an agency with Fallon's sterling reputation will find other high-profile business clients.

Johnson noted that agencies always anticipate these things and that they don't immediately start cutting people. "They look for the next business win and you have to have the horses for that," she added.

Cadillac said it selected Rogue because of its experience in integrated marketing, global capabilities and understanding of luxury brands and the automotive market.

"All of the invited agencies [including Fallon] demonstrated a high level of thinking and clearly worked very hard during the review process," said Bob Ferguson, vice president of Global Cadillac, in a statement. "We selected Rogue because its strategic insights, creative vision for Cadillac and strong luxury and automotive experience were the best match for our global growth plan."

There also had been rumblings in the trade press that Cadillac and General Motors were underwhelmed by some of Fallon's early work on the account and that agency employee turnover played a factor in the decision to move in a new direction.

In his internal memo to Fallon employees, Buchner noted that Cadillac's year-to-date sales in 2013 were up 38 percent and that its award-winning work for the ATS model led eight of every 10 new ATS buyers to switch from other luxury brands, including BMW, Audi and Lexus.

"This isn't the way we thought this chapter would close, but rest assured, it's not the end of the story," Buchner told his staff. "There are a lot of great luxury brands out there who could use our passion, strategic smarts and creativity to generate the same kind of exponential economic returns we delivered for Cadillac."

David Phelps • 612-673-7269