Wal-Mart, DraftFCB pick up the pieces

Wal-Mart Stores Inc., the nation’s leading retailer, last week canned DraftFCB as its creative advertising agency of record along with two senior marketing executives. The media is abuzz with reports of improper fraternization, favoritism and gift giving. They allege that Julie Roehm, most recently senior vice president of marketing communications at Wal-Mart, may have been influenced in her decision to recommend DraftFCB as Wal-Mart’s new agency.

We’ll find out the truth eventually. For now, the players involved are engaged in damage control.

Without doubt, this is a blow for Chicago-based DraftFCB and its parent, Interpublic Group of Companies Inc. The agency is just a month shy of formally integrating the Draft and Foote Cone & Belding sides of its operations. And here it is, the large agency of the future – with direct marketing and branding services under a single roof and P&L – without its prized $580 million Wal-Mart account. Worse, the account was won only a couple months ago, following the ouster of longtime shops Bernstein-Rein and Omnicom Group Inc.’s GSD&M.

Wal-Mart has made clear that DraftFCB cannot participate in the review, though Aegis Group’s Carat USA will be able to re-pitch for media duties. New agencies will be named by the end of January. This is good news for several agencies that may have pitched before and lost or for those who might want to give it a shot this time.

What can we learn from this mess? Take into account the advertiser’s culture. Wal-Mart is a conservative company, not given to displays of flash in its operations or advertising. Company sales seem sluggish this holiday season, but that’s what happens when you reach saturation in certain markets and categories. That’s also what happens if you sell by price and not brand, where more emotions come into play rather than logic.

Ms. Roehm was a top marketing communications executive at DaimlerChrysler’s Chrysler unit. She was a perfect fit for an auto company: dynamic, outspoken, out there. But she should have toned down that exuberance when she moved to Wal-Mart. Sure, she was an agent of change. But a little bit of discretion would have gone a long way in dealing with her employer and prospective agencies bidding for Wal-Mart business. She’ll land on her feet someplace more suited to her talent.

As for DraftFCB, the agency should focus on its integration. It’s got a talented bunch of people and a slew of great accounts. They will get through this debacle. As in life, so in advertising: you win some, you lose some.

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