Home Depot Hispanic Move Ruffles Feathers

Home Depot’s recent shift of Hispanic market creative duties to a unit of longtime general market shop The Richards Group is a classic example of client business consolidation. But that fact alone doesn’t explain the pointed reaction from the Association of Hispanic Advertising Agencies.

AHAA chair Gisela Girard (pictured) called the shift two weeks ago to the relatively unknown Richards/Lerma “controversial” and questioned the legitimacy of Home Depot’s three-month search process. Richards/Lerma, a 12-person unit that launched in 2008, beat more established market players Lapiz, Alma DDB and incumbent The Vidal Partnership to land the estimated $35 million account, leading Girard to conclude that the “value of Hispanic-specialized agencies is being undermined in the name of consolidation and cost-cutting. Claiming to provide cheaper fees and services, general market agencies are squeezing out Hispanic market specialists.”

Home Depot’s decision further blurred the lines between generalists and specialists, who also have successfully reached beyond their core competency to land business, most notably with GlobalHue taking lead creative duties on Chrysler’s Jeep brand from BBDO in the fall. Both cases also underscore the hyper-competitiveness in a down market where agencies of all types are battling to gain share. But where some specialists recognize opportunity, others see a threat, particularly when an experienced and well-regarded shop like Vidal, which had handled Home Depot since 2004, loses a significant account. And the perceived threat of generalists treading on specialist turf better explains the intensity of AHAA’s reaction.

“In this case, it didn’t seem to make sense,” said Girard, president of Creative Civilization, a 25-person Hispanic market shop in San Antonio. Home Depot’s account is a “significant piece of business for an agency member to lose and we just wanted to know why.”

Home Depot defended its selection, acknowledging that cost is always a consideration when business is reviewed but by no means the sole criteria. Richards/Lerma executives “have a solid understanding of our brand and presented an exciting creative approach based on strategic thinking that was grounded in a deep understanding of the Hispanic consumer,” a client representative said.

It would be short-sighted of a major marketer like Home Depot, which last year spent more than $450 million in major measured media, according to Nielsen, to base its selection primarily on cost, added agency search consultant Ken Robinson. “It’s a very complex decision process,” said Robinson of Ark Advisors in New York. “Finances are only one part of a weighted list of factors.”

Richards/Lerma, which is led by Pete Lerma, a principal at Richards, opened with Advance Auto Parts as its first client. Since then the unit has added MetroPCS, Prestone, Nokia and Dodge’s Ram brand, among others. Richards/Lerma shares many of its clients with the main agency, which shares resources such as production and digital. Home Depot becomes Richards/Lerma’s largest client.

Lerma acknowledged that his unit was an underdog in the review, in part because of its low profile. That said, AHAA’s reaction surprised him.

“I don’t think the industry should be outraged,” Lerma said. “They should see the opportunity that exists in forging greater relationships with a general agency partner to make brands more multicultural so that not only can the general market work influence the Hispanic work but the Hispanic work can influence the general market work in a way that makes a brand overall stronger.”

Another agency search consultant echoed that sentiment.

“With the acceptance and desire for integrated communications, everybody is at the same table and a good idea can come from everywhere,” said Richard Roth of Roth Associates in New York. Clients “really want total connections planning, integration and multiple disciplines deciding” brand direction.