It spanned eight months, involved eight agencies from five holding companies and required two full-blown pitches, but Wal-Mart's torturous and unruly search for new creative and media agencies finally came to an end on Friday when the retailer hired The Martin Agency and MediaVest.
Wal-Mart, which spends roughly $575 million annually to advertise its broad range of products, becomes the largest client by media weight at IPG's Martin, which also handles UPS and Geico. Revenue on creative duties is estimated at $20-25 million. The win boosts the 41-year-old Richard, Va.–based shop's billings over the $1 billion mark and further solidifies its standing as a national player.
"We have an unusual opportunity to work with some really, really super-talented people to do something really important for Wal-Mart," said agency CEO John Adams. "It's no secret that Wal-Mart is making a lot of positive adjustments to the way it does its marketing. To be working on that with that kind of team is a very rare opportunity."
Wal-Mart becomes the No. 2 client at Publicis Groupe's MediaVest in New York, after Procter & Gamble. Revenue on the media piece is about $15-20 million, said sources. The shop reemerged in the second pitch after bowing out of the first. In round one, the agency reached the finals with sister shop Saatchi & Saatchi only to exit in late August after Saatchi landed creative duties on J.C. Penney's $400 million account.
"MediaVest is naturally thrilled and honored to be one of Wal-Mart's strategic marketing partners," said Laura Desmond, CEO of the Americas for Starcom MediaVest Group. "We look forward to collaborating with the other agencies in applying our talent, leadership and experience for the benefit of the Wal-Mart brand and its diverse customer base."
The re-pitch came last month after Wal-Mart fired svp of marketing communications Julie Roehm and her No. 2, Sean Womack, amid allegations of what sources described as a personal relationship between the two and the acceptance of gratuities from potential vendors. Roehm also appeared to give DraftFCB more face time than the other contenders, praising the shop to a roomful of search consultants and then socializing with agency executives and consultants at pricey Manhattan eatery Nobu 57—three weeks before final presentations.
In the wake of the Roehm and Womack exits, Wal-Mart voided the results of the first pitch—which the team of DraftFCB and Aegis Group's Carat won in October—and invited all but DraftFCB to pitch again. This time, Martin bested WPP Group's Ogilvy & Mather, and MediaVest, which sources said lobbied client executives to reenter the picture, beat WPP's Mediaedge:cia and Carat.
The soap opera surrounding Roehm was particularly embarrassing for Wal-Mart, as it flew in the face of the retail giant's Midwestern ethos and further vexed corporate efforts to burnish its public image. The episode also left a cloud over the fledgling merger of Draft and FCB and its CEO, Howard Draft, because Wal-Mart refused to elaborate on the "new information" it cited in its decision to fire DraftFCB. IPG issued a brief statement in defense of Draft, saying he did nothing wrong, and IPG CEO Michael Roth flew to Bentonville, Ark., to stand with Martin at that agency's second pitch.
On Friday, as the news of Wal-Mart's decision leaked, the holding company's share price climbed above $13 on trading volume of 9.8 million, nearly double IPG's average volume, according to Yahoo Finance. The stock closed at a new 52-week high of $13.37, up nearly 3 percent from the day before.
The other creative finalist, the New York office of Ogilvy, stood in stark contrast to Martin, a smaller shop that's closer in size to previous co-incumbent GSD&M in Austin, Texas. Ogilvy is a global network known for defining hard to grasp brands such as IBM. Still, it is a quintessential New York ad agency and sources said that Wal-Mart's executives saw mid-Atlantic Martin and its top executives as a better cultural fit.
Wal-Mart, in confirming the selections, reflected on Martin and MediaVest in the context of other hires, including GlobalHue for African-American creative duties, IW Group for Asian-American creative duties and Lopez Negrete for Hispanic creative. "We've assembled a top-tier group of marketing partners that have deep retail experience, recognized creativity and an understanding of our customers," said John Flemming, executive vice president and chief marketing officer, in a statement. "They are a 'best-in-class' team that will bring our brand to life—telling the story of who we are and what we stand for: saving people money so they can live better."
General market creative and media duties previously were shared by GSD&M and Bernstein-Rein, an independent shop in Kansas City, Mo. Each agency had a long tenure on the brand, with Bernstein-Rein's tracing back to 1974 and GSD&M's back to 1987. The impact to the smaller Bernstein-Rein is greater. Sources said Wal-Mart represented more than a third of the agency's estimated $60 million in revenue. Bernstein participated in the first go-round but was cut before the final round. GSD&M, a finalist in the first pitch, declined to re-pitch. —