Kmart Hands DraftFCB $200 Million Creative Account

Retail Win Offers Bit of Redemption to Beleaguered Shop

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NEW YORK ( -- Sears Holding Corp.'s Kmart tapped DraftFCB for its $200 million account. For DraftFCB, the move is as impressive as it is face-saving, coming four months after its embarrassing loss of Wal-Mart's $580 million account last December.
The connection between DraftFCB and Sears Holdings Corp. run deep and helped to move the client-agency relationship along.
The connection between DraftFCB and Sears Holdings Corp. run deep and helped to move the client-agency relationship along.

Now, as then, relationships played an important role. But this time around, those inside connections led to a happy result.

Weeks of discussion
Bill Stewart, chief marketing officer Kmart, selected DraftFCB following weeks of discussions and a detailed credentials presentation by DraftFCB executives to Mr. Stewart and assorted colleagues, including Sears Holdings Corp. CMO Maureen McGuire.

"DraftFCB is the right partner for us to better reach our customers," said Mr. Stewart. "There are more media vehicles every day. ... My goal is to build lifetime relationships with customers every way I can, whether in store or online or through another type of media."

Mr. Stewart, who joined Kmart a year ago, knew FCB well from his previous job at Levis. There, he worked with the agency's San Francisco office on the Dockers clothing brand. "I talked with Dominic Whittles [head of DraftFCB West Coast] about marketing, and building relationships with customers," said Mr. Stewart. Kmart's marketing has historically focused on traditional media, including newspapers, circulars and TV spots. "We intend for that to change moving forward," said Mr. Stewart. "One of the things I'm looking at, and that I discussed with Dominic, is that as the media landscape and consumers' media consumption changes, so should our marketing mix." One area of focus: the company's website,

The connections between DraftFCB and Sears Holdings Corp. go deeper that the business relationship between Messrs. Stewart and Whittles, and helped to move the client-agency relationship along. "Certainly the world is small, and if you are in this business long enough, you know a lot of people," Mr. Stewart said. Ms. McGuire and Peter DeNunzio, who runs DraftFCB, New York, know each other from a prior client-agency relationship when she was at IBM and he was at OgilvyOne, according to executives involved in the account shift.

Grey was incumbent
DraftFCB assigns to each client a team comprised of media planners, creative directors, account planners, account-service executives and data analysts. The goal of that setup is to provide clients with both general-marketing expertise and direct marketing's targeting and data-segmentation abilities. The incumbent on the account was WPP Group's general-market agency Grey Worldwide and sibling G2, which won the business in August 2003 after a review. Grey's latest effort will break in May as scheduled.

Kmart, headquartered in Hoffman Estates, Ill., spent $223 million in measured media last year, according to TNS Media Intelligence.

The Kmart change is the second major agency shift at Sears Holdings in recent weeks. In late March, Sears put its $780 million media account into review. Both Ms. McGuire and Mr. Stewart are involved in the competition, which is expected to end in the second quarter. At least four agencies -- Carat, Zenith, Horizon, MPG -- and the incumbents, MindShare and Mediaedge:cia, are meeting with the retailer this week, according to executives familiar with the matter. A Sears spokesman wouldn't comment.

Cost-conscious retailer
Among investors, Sears Holdings Corp. is known as a cost-conscious retailer that looks to get "more bang for its buck," said Kim Picciola, retail analyst at Morningstar in Chicago. That approach has failed to improve sales performance, however. "Competitors keep taking share from them, both Sears and Kmart," Ms. Picciola said. "They've been talking about wanting to connect with customers for some time."

She points out that other retailers, such as JC Penney, have been more successful in building an online customer base. "They've converted their catalog business to their website, and it's been a big and growing part of their business."