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By Ruth Bender
Of DOW JONES NEWSWIRES
PARIS -(Dow Jones)- Kellogg Co. (K), the largest cereal maker in the U.S., Wednesday said it has awarded the majority of its global advertising business to Paris-based Publicis Groupe SA's (PUB.FR)Leo Burnett agency, in a blow to WPP PLC's (WPP.LN) JWT.
"Kellogg will consolidate North American, European and Latin American brand-building support with Leo Burnett," Kellogg spokesman Kris Charles said in an e-mailed statement, adding that the new account configuration will be operational by year-end.
JWT has held Kellogg's European and Latin American accounts for many years. Still, Kellogg said it will consolidate its Asia Pacific account with JWT and that it will expand communications research with WPP units Taylor Nelson Sofres and Millward Brown.
"This decision is not a reflection on the quality of [JWT's] work, but rather reflects the needs of our business to have greater alignment across our marketing model moving forward," Kellogg's Charles said.
A WPP spokeswoman wasn't immediately available to comment on the development.
Kellogg didn't say how much the deals are worth.
However, a source close to the matter said the account win is worth about EUR300 million to Publicis.
"As Kellogg Company continues to optimize its marketing model, the company has identified the need to maximize the effectiveness and efficiency of its agency partnerships to enable more scalable thinking, ideation and ad execution, and to enhance brand consistency and strategic alignment across the portfolio," Charles said in the statement.
The advertising industry has been hard hit by the economic downturn as firms around the globe cut media budgets or look to consolidate their global advertising and marketing business to save costs.
Still, Publicis has won $4.8 billion worth of net new business since the start of the year, while WPP, the world's largest advertising company by revenue, won about $3 billion in the same period, according to the most recent earnings statements from both companies.
"What has been unusual in this crisis is that advertisers are not afraid to change advertising agencies in a low cycle," Publicis Chief Executive Maurice Levy said last week.
At 1605 GMT, Publicis shares were up 2.3% to EUR26.31, in line with a 2.4% rise in the wider Paris blue-chip market.
At the same time WPP was up 2.3% at 553p against a 1.48% rise in the FTSE 100.
-By Ruth Bender, Dow Jones Newswires; +33140171754; ruth.bender@dowjones.com