High Drama Defines Wal-Mart Re-Pitch

CHICAGO The twists and turns continued last week as Wal-Mart searches for a new advertising agency in what has become one of the most bizarre selection processes in recent memory.

And as Wal-Mart’s second review this year continues to unfold, the drama surrounding the ouster of client marketing executive Julie Roehm extends well beyond the ad world.

Though the retailer invited all three creative finalists to re-pitch the account, Omnicom Group’s GSD&M in Austin, Texas, a longtime roster shop, declined to participate [Adweek Online, Dec. 14]. It is believed that Omnicom CEO John Wren encouraged GSD&M to opt out, as he was not keen on the shop potentially losing a Wal-Mart review twice in little more than two months.

GSD&M president and co-founder Roy Spence couldn’t help but crow about the decision, saying, in a statement: “We helped build Wal-Mart from $11 billion in sales to $312 billion. We declare victory. … We wish our great friends well. And we are moving on.”

GSD&M’s exit leaves only two contenders for the creative portion of the account: WPP Group’s Ogilvy & Mather in New York and Interpublic Group’s The Martin Agency in Richmond, Va. Both are expected back at the company’s Bentonville, Ark., headquarters on Dec. 21 for presentations.

Sources said a decision could come as early as that afternoon. A Wal-Mart representative said only that the winner would be disclosed after Jan. 1.

(The media contenders, which include Aegis Group’s Carat and WPP’s Mediaedge:cia, are expected to pitch separately on Dec. 20, according to sources. Carat won the initial pitch after partnering with DraftFCB.)

During two-hour creative sessions on Thursday, Martin and Ogilvy will present to a mix of executives who heard presentations in the first review, as well as a few who were not present at the previous go-around, per sources.

CMO John Fleming and svp of marketing Stephen Quinn, decision makers in the first review, will likely be in attendance this week, per sources.

However, two Wal-Mart marketing executives who played key roles in the last review—Roehm and Sean Womack—were abruptly dismissed two weeks ago [Adweek Online, Dec. 7]. Sources have cited allegations of an improper relationship and the acceptance of gratuities from potential vendors, but Wal-Mart has never given a reason for their ouster, and Roehm has denied any impropriety.

DraftFCB was fired two days after Wal-Mart canned Roehm and Womack.

With DraftFCB barred from re-pitching and the atmosphere highly charged, many questions linger about what approaches the two creative contenders would take, both in terms of creative recommendations and fee structures.

It is unlikely Ogilvy will put forth the “Lifenomics” line from the last go-around, which tested at the bottom of the heap among the four contenders’ work, according to sources.

It’s also unclear if Ogilvy would revise its fees, the highest by far among the contenders. Ogilvy is said to have come in well over $50 million. By way of comparison, DraftFCB is said to have come in at around $48 million (for both agencies, about $15 million of their respective totals was earmarked for their media partners). Martin came in at approximately $44 million and GSD&M at $33 million; both handle media chores in-house.

The contracts of Wal-Mart’s current agency partners, GSD&M and Kansas City, Mo., independent Bernstein-Rein, run through Jan. 31. As of last week, those contracts had not been officially extended, though executives at both shops said they were available to help with the transition. (Bernstein-Rein was eliminated early in the first review and not invited to participate in the second contest.)

DraftFCB won eight of 10 votes from the selection committee in the first review; the other two went to Ogilvy.

Last Thursday, agency CEO Howard Draft issued a memo to his employees titled, “Truth and Trust.” In that memo, Draft said that there were “malicious rumors and speculation … by people more interested in sensation than truth.” The memo stated that the agency had conducted its own investigation to ensure the shop had abided by “Interpublic’s and our own strict code of conduct. We have completed this investigation, which has not uncovered any instances in which we violated either policy.”

He concluded, “It is important for you to know that—and equally important that our clients know that.”

Similarly, IPG CEO Michael Roth expressed confidence in the agency and its executives. “[We] found no instances of behavior that violate any of our policies or our code of conduct,” Roth said in a statement. “We continue to believe in DraftFCB’s modern new model and its ability to connect marketers with today’s consumers and we fully support Howard Draft and his management team.”

The defense came as observers continue to ponder what went wrong between the client and agency.

While much has been made of Wal-Mart’s strict gratuities policy and the dinner at New York’s Nobu 57 (where Roehm may have gotten a bit too cozy with at least one DraftFCB executive), a series of events appear to have rankled Wal-Mart’s senior management.

They were especially irked by a Nov. 13 BusinessWeek story where the events of the Nobu dinner and a ride in Draft’s Aston Martin were first detailed (the spin actually took place in Chicago with Roehm and Womack, not in Manhattan with Draft and Roehm, as the magazine reported.)

But the culture clash became more apparent after the agency created a Cannes ad depicting two lions fornicating under the headline, “It’s good to be on top,” generating a landslide of negative buzz.

Draft, who said he did not see the ad before it ran, is believed to have gone to Bentonville to personally calm Wal-Mart executives.