Burger King Puts Ad Account Up for Review - TheStreet

Burger King Puts Ad Account Up for Review

A key factor was the failure of recent ads to spark new sales.
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Updated from 2:02 p.m. EDT

Burger King

, the world's second-largest fast-food hamburger chain, said Tuesday that it was putting its $400 million U.S. advertising account up for review after recent ads failed to spark new sales.

The restaurant chain, which is owned by London-based food and beverage giant

Diageo

(DEO) - Get Report

, said the review applied only to its current "agency of record,"

Lowe Lintas

, a subsidiary of the

Interpublic Group of Companies

(IPG) - Get Report

. Burger King said

Uniworld

and

Bromley Aguilar

, the agencies that have handled its African-American and Hispanic advertising since the mid to late '80s, are not subject to the review.

Mikel Durham, Burger King's new North American president, said the decision to reassess its contract with Lowe Lintas is part of an effort to improve sales in North America, which represents about 80% of worldwide sales. She said a key factor was the failure of recent ads like those featuring the popular music group the Backstreet Boys to spark new sales.

Lowe Lintas, which has created Burger King's ads for the past six years, has been given four months to convince the fast-food giant that it should retain its services. Other ad agencies have also been invited to pitch potential ad campaigns to the burger chain.

Burger King enjoyed an increase in sales throughout the mid-'90s with Lowe Lintas ads like those that argued "It just tastes better." But the more recent campaigns, featuring ads that ask "Got the urge?" or encourage Americans to "Get your burger's worth," have left the fast-food chain wondering if it was getting its money's worth.

While Burger King's market share grew overall during its six-year relationship with the ad agency, sales have slowed in recent years. After consistent growth throughout the late '90s, the restaurant's market share has started to slip this year -- falling to 17.3% this May from 17.6% in May 1999, spokeswoman Kim Miller said.

In an effort to regain market share, the fast-food chain launched several new consumer research initiatives six months ago to look into overall market trends, research lifestyles and product preferences among its core market of 18- to 34-year-old consumers, and introduce new products for testing.

"We need to get back to basics, get in touch with our customers, and develop powerful, integrated communications programs that reconnect us to them," Durham said in a statement. "We're going to look for an agency with a point of view and a proven approach -- an approach that ensures a needle-moving connection to our customers."

The Miami-based Burger King operates more than 11,180 restaurants in the U.S. and 57 other countries.

Diageo finished Tuesday regular trading down 6 cents at $33, while shares of Interpublic Group of Companies ended down 31 cents at $37.69.