"Diamond Ad has a very long relationship with Hyundai, but (Hyundai) is expected to open some projects to other agencies to warn Diamond Ad," said an industry source in Korea. "Not the whole account but some products and brands. If they gave the whole corporate advertising to one agency it would be quite risky as they are quite accustomed to Diamond."
According to a media source, Diamond's business with Hyundai is worth around 30 per cent of its reported billings of 300 billion won, or 100 billion won (US$95.5 million). After starting life as the chaebol's in-house agency, Diamond was bought by the Cordiant Group at the end of 1999, and separated from the chaebol shortly afterwards. It is believed that the expiring contracts stem from this period, although some agreements - such as those between Diamond and Hyundai Motors - have already seen account reviews. "Hyundai Motors has already started using (Korean agency) Ablea and the smaller Hyundai Group companies are also having pitches," added another source. In addition, it is believed that Hyundai Motors - which split from the Hyundai Group in 2001 - is mulling the possibility of creating its own inhouse media and creative department.
The news comes with many Korean agencies suffering layoffs following a broadening consumer slump. The Korea Broadcasting Advertising Corporation (Kobaco) is expected to fall short of its 2004 sales forecast, which was set lower than its 2003 revenue, a first in the organisation's history.
Kobaco is also predicting decreased 2005 sales.