Young & Rubicam is uniting its shopper marketing capabilities in Latin America under the banner of Labstore, the name of a like unit in Madrid. With a single moniker, Y&R expects shopper marketing personnel in Argentina, Brazil, China, Colombia, Mexico and Puerto Rico to more regularly share resources and knowledge. Also, although these nearly 300 staffers sit in the same offices as their main agency brethren, Labstore will have its own profit and loss responsibilities. Y&R Latin America CEO Eddie Gonzalez discussed the rationale for the branding move and his growth expectations for the unit.
Adweek: Labstore is a homegrown brand, right?
Gonzalez: It was originated in Spain back in 2001. One of their key clients is Telefónica, which also happens to be one of our key clients in Latin America. In other markets, we also service some of our core Y&R clients like Colgate and Danone.
Previously, this capability had different names in different countries.
Correct. For example, in Chile it was called Y&R Retail. Now we’re trying to integrate and consolidate the offering.
What are the pluses of doing it this way?
First, shared learnings. Find out what everybody is doing and try to establish some tools that everybody can take advantage of. Also, leverage our Brand Asset Valuator (research tool), which can help us connect a shopper with a brand. It’s like not [having] everybody out there like an independent island but being able to learn from best practices, what everybody else is doing.
How important is this as a revenue stream for Y&R?
It’s not yet at the level that it would be significant. In these markets, we’re talking about 300 employees, give or take. It’s definitely one area that we’re also looking at for the future—Hispanic markets. Retail in Hispanic markets. It’s key.
How is shopper marketing different in Latin America—or Spain—than in the U.S.?
I don’t think it’s different in the U.S. to Latin America in the sense that you’re trying to connect the consumer to the brand at retail. There are some operations, like the one in Spain, that [involve] the consumer-retailer encounter. … Some of the clients that Spain might have are clients that have their own retail outlets and we work with them in that regard. I think in the U.S. it tends to be more orientated toward fast-moving consumer groups.
The existing shopper marketing staffers in Latin America share space with Y&R staffers, correct?
Will Labstore have its own profit and loss responsibilities?
We’re going to have our own p&l and branding like an independent unit.
Will Labstore have a CEO or creative chief?
Where the business is today, we really want to build things around clients. And the more CEOs you have, I think, the more costly [it becomes]. Each office will have a lead shopper marketing expert. Maybe CEO would not be the right word, but it definitely would have a lead shopper marketing director.
Some agencies, like Saatchi & Saatchi, develop this capability through an acquisition. Why did Y&R do this from scratch?
From a Latin American space, there’s not much out there. There might be, in a given market, a good operation that we might look at in the future. I would not discard that as an option. But it’s not something where I can go in and [buy] some network and get a region-wide offering.
Will Labstore spread to other markets of the world?
Probably better to quote [global CEO] David [Sable] on that. But we definitely want to integrate and consolidate our offering, which we’ll also do in other parts of the world. Will we follow the Labstore brand or what makes more sense to a region? I don’t know. But we have the offering and just have to extend it.
Of the accounts that Labstore has today, are they 100 percent shared with Y&R?
Probably close to 90 percent of the accounts are shared with Y&R. I think eventually we could have clients that are managed by Labstore and that might not be shared with Y&R.
Where would you like to see that figure in five years?
Maybe 60 percent shared and 40 percent not shared. The reason I say that is because that would be a sign that the operation on its own—other than adding services to or complementing our offering at Y&R—is a strong operation in every market that we operate.
Shopper marketing is not the sexiest field, but can you make the case that it’s among the more effective ways to reach consumers?
I don’t know if it’s sexy or not but there are a lot of people who are very much into the space. Even some of the research that we have suggests that 80 percent of [purchase decisions] are made at the point of sale. … So, I definitely think it’s critical for clients. As media gets more diluted—online and offline—our retailers are getting more consolidated. So, whatever money you put on that last-minute decision that you’re making, chances are it’s going to be more effective.