Government and Media & Marketing

Out-of-state ad agency nabs lottery: Louisville's Bandy Carroll chosen over native firms

October 24, 2005

The giggle will soon be gone.

Hoosier Lottery officials are eliminating the tag line giggle in their ads. And, more significantly, they're replacing the local firm that created those ads with a Louisville-based advertising agency.

That decision has wiped the smile off many faces in the local advertising community. One local industry executive said agencies here are stunned given the state's pledge to "buy Indiana."

The Louisville firm, Bandy Carroll Hellige, beat out Bloomington-based Hirons & Company Communications Inc. and Indianapolis-based MZD Advertising to win the lottery contract, now held by Indianapolis-based Roman Brand Group.

"We know what the state lottery means to Indiana given the money it generates for the state," said Mary Dowell, vice president and general manager of Bandy Carroll Hellige's nine-person Indianapolis office. "It's important to note that this opens up a lot of opportunities for [Bandy Carroll Hellige] and allows us to grow locally and become an even bigger part of this community."

The three-year contract, which is expected to be signed Oct. 21, is valued at about $1.8 million. Bandy Carroll will pay its creative and production expenses from that amount. The size of its fees will hinge in part on boosting lottery sales-an approach lottery officials believe will save the state money.

That potential savings didn't placate firms that lost out on the account.

"When it went to a smaller shop with no particular experience in this area, I was surprised," said MZD President Harry Davis. "We were the only one of three finalists with this kind of experience."

But Hoosier Lottery Executive Director Esther Schneider said Bandy Carroll has significant gaming experience, including a stint as agency of record for the Kentucky Lottery from 1990 to 1992. Bandy Carroll also handles the McDonald's restaurant account across Indiana.

"McDonald's is a very aggressive retailer in Indiana, and we wonder how much we can learn from McDonald's," Schneider said.

Schneider said Bandy Carroll will exclusively use talent in its Indianapolis office to service the account. The office plans to add two creative positions to handle the additional work.

"It's a fact of life; creative shops have to compete with shops from anywhere," Indianapolis AdClub President Ben Carlson said.

Local ad agency executives said the lottery account is so high-profile that it helps bring in other business, a benefit as important as the direct fees the contract generates.

"One of our primary goals is to expand in this state, and we think we've made a significant step with the Hoosier Lottery," Dowell said.

Schneider said she was impressed with Bandy Carroll's plan to develop new lottery games for current players and to reach out to new audiences.

"The methodology they used to assess the challenges we face was very methodical," Schneider said. "They did a thorough line of questioning to develop an analysis of lottery players and see where the goals need to be."

Roman Brand Group has handled the lottery campaign since 1999. It took over from MZD, which had the account from 1989 to 1998. After lottery officials this year decided to move some advertising and public relations functions in-house and to bundle the lottery's media buying with other state agencies, Roman Brand decided to not aggressively pursue the account, CEO Dan Roman said.

Fort Wayne-based Asher Group is handling the lottery's media buying.

"I don't think there was any point in us getting involved in a bidding competition," Roman said. "I think the fact that they were putting the account up for bid showed they were going in a different direction."

Bandy Carroll will take over the account Nov. 7, and handle the remainder of the lottery's fiscal year, which ends July 31. After that, the lottery has the option of granting two one-year options. Bandy Carroll will receive $500,000 for the first nine months, from which it must pay creative and other expenses before pocketing a fee, Schneider said.

"Roman Brand's [annual] fee alone was $700,000, so you can see we'll be doing this at a cost savings," Schneider said.

Schneider said the Asher Group is also getting a smaller cut of the lottery's ad spending. Previously, the lottery's ad agency received a 15-percent commission on ad placement. Asher agreed to 2.5 percent to 3 percent.

Schneider said the onus will be on Bandy Carroll to increase the lottery's $770 million in annual sales and still make a profit for the firm. Contract renewals and future fees, she added, will be based on sales increases.

"We're going to start running this less like a government agency and more like a real business," Schneider said.

Roman said Lottery officials and Bandy Carroll have their work cut out for them.

"When you take production accounts and lower them substantially, it's difficult to produce memorable ads," Roman said.

But Schneider, who has a lengthy background in marketing and sales, disagrees.

"We're looking to create a very simple call to action, a tag line specifically about the product and price," Schneider said. She added that it's a waste of money to spend heavily to produce ads, since they change almost every month.

Schneider said the lottery will deemphasize TV advertising and spend more on billboards and point-of-purchase advertising. Spending on radio advertising will remain level, but more dollars will go to stations appealing to the lottery's target markets. Radio stations appealing to listeners primarily under age 24 are out, Schneider added.

"We need to hit people in their cars and at the point of purchase. That's our last chance to get our message through before a potential purchase," Schneider said.

As for the lottery ads' trademark giggle, Schneider pulled the plug.

"The giggle was memorable, but it seemed to grate on people," she said. "That giggle seemed to be one of the most offensive things to people about our campaign. We're looking to reconnect with people in a different way."
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