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Johnson & Johnson Sends US Consumer Health Business to MDC Partners’ Doner

WPP is closing its The Neighborhood unit led by Wunderman Thompson

Johnson & Johnson has moved its consumer health business in the U.S., comprising its Listerine, Tylenol and Zyrtec brands, from WPP’s Wunderman Thompson to MDC Partners’ Doner.

“Johnson & Johnson Consumer Health has decided to engage Doner to explore new creative options for advertising and digital marketing for our US Self Care business, including creative work for Tylenol, Zyrtec and Listerine,” a spokesperson for Johnson & Johnson said in a statement. “We believe Doner offers the specialized attention needed to support our marketing and growth objectives for our Self Care business where we are focused on personal health and our brands are rooted in science and endorsed by professionals. We look forward to partnering with this talented and diverse team.”

As a result of the decision, WPP has closed The Neighborhood, the dedicated unit created to service the Johnson & Johnson U.S. consumer business last year. WPP continues its relationship on the consumer brands outside of the U.S. and with other portions of the Johnson & Johnson account domestically, including pharmaceutical brands.

In a further statement, a Johnson & Johnson spokesperson explained that the company’s consumer business “recently established a new business model that streamlines our priorities and allows us to be more agile and focuses on relevant innovations that provide the most positive impact on our consumers’ lives. As we look ahead to 2020, we’ve identified ways to evolve our agency ecosystem to better support our business.

“After a great deal of analysis and consideration, we made the difficult decision to end our AOR partnership in the United States with bespoke agency solution, The Neighborhood, led by Wunderman Thompson,” the statement continues, concluding that the company is “grateful for the team’s partnership and collaboration” and “proud of the work we’ve achieved together” while clarifying that the partnership with Wunderman Thompson outside the U.S. remains intact.

In a statement, WPP disputed characterizations made by Business Insider about the impact of the move to WPP’s relationship with Johnson & Johnson in its reporting about the move.

“A report published by Business Insider stating WPP lost a ‘huge chunk’ of revenues when Johnson & Johnson shifted its Tylenol, Listerine and Zyrtec brands in the US from The Neighborhood, the bespoke agency WPP created to handle the client’s consumer brands in that market in 2018, wildly exaggerates the impact of the client’s decision,” a WPP spokesperson wrote in the statement. “WPP did not lose ‘most of the US business of one of its oldest and most valuable clients,’ as Business Insider incorrectly states. WPP continues to work with J&J on its pharmaceutical brands in the US, which is the lion’s share of its US revenues from J&J. It retains its global relationships with the client and J&J remains one of WPP’s top-20 clients.”

Johnson & Johnson spent nearly $91 million on marketing for its Listerine, Tylenol and Zyrtec brands in the first six months of 2019, down from over $114 million over that period in 2018 and nearly $194 million in total last year, according to Kantar Media. In light of the aforementioned changes to Johnson & Johnson’s business model, the company’s spending will likely be reduced further going forward. Data consultancy COMvergence estimated Johnson & Johnson marketing spending across all consumer brands (not limited to the consumer health category) outside the U.S. at $775 million annually; however, it’s possible this spending is also reduced as a result of recent client changes.

By comparison, Johnson & Johnson spent almost $96 million on its pharmaceutical brands in the first six months of 2019, compared to over $116 million over that period last year and over $250 million in total last year, according to Kantar Media. The company’s spending has been trending downward across the board. Across all its divisions, Johnson & Johnson spent over $394 million in the first six months of 2019, down from nearly $434 million during that period last year and a little over $858 million in total last year, according to Kantar Media.

For MDC Partners, the shift marks a major win following a $100 million investment from Stagwell Group that led to Mark Penn taking over CEO for the holding company and should help boost its fortunes after MDC Partners reported a 4.6% decline in revenue for the second quarter.

Source: Adweek