Molson Breweries’ sudden firing last week of MacLaren McCann, its cornerstone agency for almost 40 years, ends one of the most enduring relationships in Canadian marketing history.
The split confirms the gossip and speculation that had been swirling through advertising circles since Molson yanked responsibility for its current Canadian campaign from MacLaren and handed it to Encore Encore Strategic Marketing earlier this year.
MacLaren’s most recent ‘I am Canadian’ spots, featuring scores of monkeys banging away at typewriters, were widely criticized as being too eccentric to appeal to the core 19- to 24-year-old beer drinker.
However, Molson’s relationship with MacLaren had been in trouble for some time, according to Richard Kelly, Molson’s senior vice-president of strategic marketing and the key decision-maker in the agency review that has now been set in motion.
‘This is not related to any one campaign or ad,’ says Kelly. ‘This has been brewing for a few years, and the fact that it has been a productive relationship for this long is almost a miracle.’
Molson’s three major brands – Canadian, Export and Miller – are each estimated to be worth between $2.5 million and $3 million per year in revenue to an advertising agency. That figure escalates to between $17 million and $24 million when media buying is taken into account. However, MacLaren’s Initiative Media unit retains media buying responsibilities for Molson.
The break came as little surprise to Tony Miller, MacLaren’s president and CEO, who says, ‘The writing was on the wall.
‘This is a formalization of what has been a reality since the turn of the year,’ he says. ‘With a new president (James Arnett) in place, it is predictable that a clean slate is often an appropriate strategy.’
In the cutthroat battle for a share of Canada’s $10-billion-a-year beer market, MacLaren just wasn’t delivering the results Molson needed, Kelly says.
‘Obviously, we wouldn’t have parted company if we were completely in sync with them,’ he says. ‘There is a reason we’re doing this, and it’s not just to have a clean slate, as I’ve heard described.’
MacLaren was responsible for some of Canada’s most memorable beer advertising. Its ‘What Beer’s All About’ campaign in the late 1980s helped push Molson Canadian to market leader in 1992. And, in its early days, the ‘I am Canadian’ campaign was hailed as one of the most effective campaigns in Canadian advertising, contributing to consistent double-digit sales increases that kept Molson ahead of Labatt.
But Molson sales have seen only minuscule growth recently, with the company reporting its market share last quarter at 45.3%, up from 45.2% the previous year. National market share for its flagship Canadian brand has plateaued at 11-12%, about the same share claimed by Labatt Blue.
Company profits have been sagging as well. Molson reported profits of $28 million in fiscal 1999, down from $39.1 million a year earlier. Dan O’Neill, Molson’s recently appointed COO, conceded that the company’s profits are $100 million below Labatt’s, even with the same level of sales.
In a conference call to Bay Street analysts earlier this year, Molson president James Arnett openly questioned whether the company was getting full value for the nearly $200 million it spends on marketing every year.
However, Kelly says none of that should lead anyone to assume that Molson will be spending less on promoting its brands once it chooses a new agency in August. ‘In fact,’ he says, ‘we may end up spending more to promote Canadian and our other brands.’
