There was attempt after attempt to get Kodak Gallery out of the grasp of ad agencies that were flat-out gouging the company. We were not only paying for marketing services that did we not need, but in many cases we had absolutely no idea what we were actually paying for. And if that wasn’t scandal enough, these ad agencies were well aware that Kodak Gallery, as a subsidiary of Eastman Kodak, was basically at their mercy when it came to costs.
Eastman Kodak mandated that Kodak Gallery use the same ad agencies, and I suspect that this was for all intents and purposes a way to influence pricing based on combined volumes. However, the problem is that neither Eastman Kodak nor these ad agencies seemed to care that the large scale coordinated services provided by these big ad agencies are typically created for a large corporations, not small wholly-owned subsidiaries.
It was also well-known throughout Eastman Kodak that Kodak Gallery couldn’t afford the big agency rates, yet Eastman Kodak offered no support for our efforts to break free or get the agencies to be more flexible. Kodak Gallery developed much smaller marketing schemes, and the ad agencies continued to bill us at the same rates as Eastman Kodak for campaigns that were not nearly as intricate in scope. For a company the size of Kodak Gallery, this was suicide.
Eastman Kodak’s #1 agency of record, and long-time partner, actually refused to reveal their cost model to my purchasing department. This would be completely unacceptable behavior by any agency, and only possible through a relationship with and support from upper management. I have no doubt that was exactly what I was up against. If given that basic level of transparency about their pricing structure, it would have given procurement an opportunity to have an intelligent and detailed discussion about costs. That insight could potentially have shaved millions in costs for services we did not need or use. The agency was well aware of that, and so was Kodak.
When I engaged top marketing executives at Kodak about, this nothing was done about it. I pleaded with Kodak that I be allowed to source marketing agencies that were less expensive and more nimble to meet our needs as a small subsidiary; however, again I was ignored and Kodak Gallery was effectively forced to do business with these major ad agencies on our puny budgets.
As I see it, this irrationality was possibly the predominant feature in the demise of Kodak Gallery, Kodak’s digital business, and once-brightest star.
Below is an example some of my ongoing communication with the Eastman Kodak office in New York. This particular correspondence occurred around December 2009 between me and one of the Sourcing Managers in Worldwide SGA Purchasing. It’s revealing in that it illustrates the lack of communication between the organizations and even suggests that vital information was intentionally concealed from Kodak Gallery procurement. Keep in mind that Kodak Gallery was in constant communication with Eastman Kodak marketing executives and managers expressing our need to negotiate rates, etc., yet we were never informed of nor represented at any of the discussions that are referred to in this email exchange:
Hi John,
Long time no talk. I hope the Holidays have been good to you so far! I have heard rumblings here that we may have transferred to a new ad agency. Do you know any details of this and the current relationship with Ogilvy? Specifically, the procurement team here would like to ascertain who the “new” agency is, where the contract is, and what procurement team was involved. Any help would be appreciated. Thanks!
Best, Patrick
(reply)
Subject:Re: New Ad Agency??
We are shifting much of the work that O&M did over to Deutsch but O&M will still be around, mostly in a regional capacity. And yes, WWP has been involved in the process (we are working with Antoine Dreyfus, who is overseeing the project from a Marketing Role). We already have contracts in place with O&M and Deutsch but are in the process of updating them both to cover their new respective roles. The contracts are not done yet, still underway.
I am a bit surprised you are not aware of this; it’s been something that I know Marketing has been working on virtually all year. It was not until recently (when Antoine came aboard) that things really started to pick up and begin to actually move forward. I know there have been discussions between Erin Foster and Gallery Marketing on this issue. Although I know there has been some debate between the two groups on when and how Gallery will make the jump.
John - Sourcing Manager
Worldwide SGA Purchasing
(my reply back to John) John:
Please let me know if you can help us figure this out or if you can suggest the direction (person) I should go.
We need to sort out how we at Gallery as a small subsidiary can either get competitive rates from a large agency like Deutsch, or if you can help us pick smaller alternatives such as Partners & Napier, etc. (I’ve heard that Antonio Perez has used them.) We simply cannot afford to pay what Kodak pays, nor do we need the same level of service. Our concern is that Deutsch may be just as expensive as O&M and substituting one for the other will not resolve our problem. The goal is to reduce spend and maintain the bang!
I appreciate what you can offer.
Best,
Patrick