CVS Taps Havas' Arnold as Lead Creative Agency

Joins Mindshare as New Agencies for Now-National Pharmacy

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NEW YORK (AdAge.com) -- CVS has named Arnold its lead creative shop after a pitch that came down to a two-way shootout between the Havas-owned shop and WPP's Y&R, according to executives with knowledge of the review. The incumbent was another Boston-based agency, Interpublic Group of Cos.' Hill Holliday.

Over the last eight years CVS has transformed from a regional drugstore to a national health-care player, now with 7,000 retail locations.
Over the last eight years CVS has transformed from a regional drugstore to a national health-care player, now with 7,000 retail locations.
The drugstore giant held simultaneous reviews for its creative and media assignments, but concluded its media review early, recently naming WPP's Mindshare its planning and buying agency of record. Mindshare beat out sibling MediaCom and Omnicom Group's OMD for the $150 million media account.

Boston-based consultancy Pile & Co. helped manage the process.

Erin Pensa, senior public relations manager at CVS, said via e-mail that the company had "no announcement or comment at this time" regarding the review. Arnold and Y&R representatives declined to comment.

This is the first major win for Arnold since naming Andrew Benett its first global CEO in February.

The agency changes are significant for CVS because they represent the marketer's first agency reviews in more than eight years. Earlier this year, CVS Chief Marketing Officer Rob Price said the company launched the reviews because its revenue and store count had more than doubled over that period, transforming it from a regional drug store to a national health-care player. CVS currently has 7,000 retail locations.

"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."

Earlier this month the company reported $23.8 billion in revenue for the first quarter of 2010, up slightly from $23.4 billion in the first quarter of 2009. Revenue also increased for both of its divisions -- pharmacy services and retail pharmacy segments -- for the first quarter. For the quarter, sales at stores open at least a year, in the retail pharmacy segment, increased 2.3% while same-store sales jumped 3.7% in the pharmacy division. The company is building off a very solid 2009 in which CVS saw total revenue increase to $98 billion from $87 billion in 2008.

CVS has also been outperforming its peers throughout the recession. However, it will soon face a more consolidated field of competition with Walgreen's $1.1 billion purchase of Duane Reade, expected to be completed at some point this year.

In 2009, CVS spent $142 million on measured media, and in 2008 it spent $143 million on measured media, according to Kantar Media. Its ad spending is actually higher with the advertising costs associated with its massive ExtraCare loyalty program, which the retailer said aren't included in Kantar's numbers. That program includes more than 50 million cardholders and includes a variety of targeted marketing efforts, such as promotional offers at the register and coupons via e-mail and direct mail.

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