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Are Ad Agencies the Next Target for Sears Holdings' Cost-Cutting?

The company reaches out to holding companies

FCB created the viral hit 'Ship My Pants' ad for Kmart.

Sears Holdings has contacted ad holding companies about handling all marketing communications for Sears and Kmart, sources said.

Collectively, those brands spent $560 million in media last year—the majority of which ($350 million) went toward Sears, according to Kantar Media. Kmart's spending totaled $210 million.

Sears' lead creative agency is Aegis Dentsu’s Mcgarrybowen and Kmart's is Interpublic Group’s FCB. Havas Worldwide is also on the Sears roster, creating ads for its Kenmore, Die Hard and Craftsman brands. Havas Media plans and buys media for both brands.

Sears is understood to have reached out beyond those incumbents in its search for efficiencies.

The troubled retail company has been shedding assets like Lands’ End and real estate amid declining sales. In the 39 weeks that ended Nov. 1, sales for flagship Sears were flat while those at Kmart dropped 1.2 percent. The company cautioned that it could lose up to $630 million in the quarter ending Nov. 1.

The scope of the marketing assignments in the procurement-driven review is broad, covering advertising, digital, PR, direct and other marketing, but it's not clear if all of the business will be consolidated within a single holding company, sources said.

Sources said meetings are just beginning with a decision expected in January.

The roster shops either declined to comment or could not be reached. Sears did not return calls.

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