CVS Launches Advertising and Media Reviews

Hill Holliday Expected to Defend

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NEW YORK (AdAge.com) -- CVS is launching reviews of its creative and media accounts in order to adapt to a changing business landscape and its own growth.

CVS said that it has a number of agencies supporting its creative and media business, including Hill Holliday, Standard Time and Conill. Hill Holliday also handles the retailers' media account, with support from iCrossing. Pile & Company is conducting both reviews.

Rob Price, senior VP-marketing and advertising for CVS Caremark, said that current agencies have been invited to participate in the review. Hill Holliday is expected to defend, according to executives familiar with the matter. A Hill Holliday spokesman would not comment on the matter.

An executive with knowledge of the review said the reviews will be conducted separately but "in similar time frames." The media portion, which will cover traditional and digital planning and buying duties, is in the initial stages and the creative will follow shortly thereafter. CVS is looking to wrap the media review by late March.

The last time the retailer held a review was eight years ago, according to Mr. Price. Since then, he said, the company has changed significantly, with revenues and store count doubling. The company has also shifted from a regional drug store to a national health-care player.

"Right now, our momentum and projected growth demand a more powerful and integrated media and creative strategy," he said. "The industry has evolved over the past eight years with new and innovative advertising tools and techniques. The consumer is more informed and involved in their health-care decisions than ever before and, as a result, media consumption has changed. Also, the retail landscape has changed significantly with the consolidation of competitors within our class of trade and the expansion of competition outside of our class of trade."

The retailer spent $143 million on measured media in 2008 and $92 million on measured media in the first three quarters of last year, according to TNS Media Intelligence. The company has said those figures don't encompass the advertising costs associated with its massive ExtraCare loyalty program. That program includes more than 50 million cardholders and includes targeted marketing efforts, such as promotional offers at the register and coupons via e-mail and direct mail.

The chain, which counts more than 7,000 retail stores and has $87 billion in annual revenue, has performed better than its peers throughout the recession. In November, for example, it reported that same-stores sales for the quarter had risen 6%. Walgreens has posted low- to mid-single-digit same-store sales increases over the past few quarters. Duane Reade's same-store sales have been flat to up by low single digits and Rite Aid has seen declining same-store sales.

Contributing: Rupal Parekh