A dozen years ago, before Target had struck up a string of collaborations with elite fashion designers or cemented its reputation as cheap-chic central, the retailer's marketing department called Vogue to buy space for several ads.
The response? No, thank you.
Tom Nowak, president of Minneapolis-based Peterson Milla Hooks, then Target 's agency, recalled that the retailer "got a letter saying, "We don't want your money, because including a brand like Target would diminish the quality of our advertising.' "
The way the shop and the client saw it, the only option was to make Target 's advertising more appealing. Around the same time, Target challenged PMH to devise a branding campaign that would help it break out of the mold of dowdy Midwestern discounter and redefine what a large retail store could do. PMH succeeded not just once, but with campaign after campaign that proved critical to securing Target 's reputation for great design.
Peterson Milla Hooks worked with Target for just shy of two decades, and when it completed its last major project in the fall of 2011 (the launch of the collection from Italian fashion house Missoni) it had long since won Anna Wintour's seal of approval. Target had a 20-page insert in Vogue's September issue and bought the back cover.
"Target changed the expectation of what a discount store can be," Mr. Nowak said.
A large part of what took the store from below-the-radar to iconic was its focus on clever advertising. From the moment it opened the doors in 1962, Target was working with partners on advertising. And while it's always maintained a set of internal creative resources, outside shops helped spur its transformation.
"There are times where we need provocative ideas," said Shawn Gensch, Target 's senior VP-marketing. "[Agencies] push our thinking and keep us on the edge from a brand perspective, a voice perspective."
Retail experts will say that the effort that really put Target on the map was 1999's "Sign of the Times" by PMH. The whimsical TV spots and billboards -- which reinterpreted Target 's red-and-white bull's-eye logo as a pattern for dresses, rugs and vacuums, and painted a bull's-eye on the now-iconic dog -- diverged from traditional retail ads. That departure from what the competition was doing set the tone for Target 's advertising and remains the linchpin of its marketing platform.
" 'Sign of the Times' was among the first of Target 's big national advertising campaigns and certainly is one of the most talked-about," said Mr. Gensch. "Our goal was to differentiate Target as the retailer that could give guests that high-end designer lamp or even a new outfit, for less. ... The keys to our advertising success, from [that ] campaign to our ads today, is that we keep the focus on using humor, having a point of view and talking intelligently to our guests."
Dave Peterson, PMH founder and creative director, said that "Sign of the Times" was a breakthrough for the agency because it was allowed to do work intended to elevate a brand rather than sell merchandise.
"All the bull's-eye patterns were able to capture the chic, but it was brave because it didn't [portray] a product at all," Mr. Peterson said. "That was definitely a benchmark for us."
The shop's ability to make discount retailing a tad more highbrow was underscored by Target 's earning a posh nickname from devotees, who began referring to the store -- in faux-French -- as "Tar-zhay."
That laid the groundwork to make Target attractive to home and clothing designers who wanted to create low-price capsule collections, starting with Michael Graves and Isaac Mizrahi, then Anna Sui, Jean Paul Gaultier, Alexander McQueen, Proenza Schouler and Liberty of London.
The combination of fashion and packaged goods plays into PMH's sweet spot. A slide in the credentials deck shown to the agency's prospective clients explains it best: the Procter & Gamble and Dolce & Gabbana logos with the phrase "love child." The message: The agency approaches all consumer brands with a fashion instinct.
"They have once again demonstrated that a smart agency working with a smart client can help promote and build a brand, regardless of the category," said Dave Beals, president-CEO of Chicago-based consultancy R3:JLB, which conducts agency searches for marketers. "The right brand voice and how you express it is what matters.
"What's different about agencies that work well with retail is [they] have to understand retail dynamics day in and day out, Mr. Beals added. "There's an urgency to it that not every other category has. ... It's a tough balancing act, and tough to do well."
PMH's culture has a lot to do with its success. "We have a pretty down-to-earth approach, and "no divas' is a rule," said Mr. Nowak.
Its hiring strategy is also unique. PMH largely focuses on those without agency experience, the aim being to make its processes and work less formulaic. The firm prefers to recruit candidates from publishing, editorial and filmmaking.
"We don't hire creatives from general-market agencies," Mr. Nowak said. "You aren't going to find people from the Goodbys and Fallons here."
Size matters, too. PMH has just over 70 employees, which Mr. Peterson said is just right. "We're better off at a size where everybody knows one another. ... That allows us to work quickly, and in retail that 's so important. You have got to be extremely flexible and able to react quickly, and when you have a close-knit group it just works better."
One of the things the agency routinely does for every campaign is create a style guide for all brand-related marketing material. PMH said is position is that promotions, circulars and in-store signage for a retail client should have the same look and feel. Unlike, for example, automotive, where dealer ads and brand work can look vastly different.
"Our advice to brands is that we think personality can be a differentiator," said Mr. Nowak. "If it's all product and price, it's difficult because it's just about the lowest common denominator. Finding a look and feel and tone that connects with people is something we're really good at. ... You would know in five seconds that it's a Target ad, and that 's an accomplishment.
"A lot of retailers focus on the transaction, but we really do believe that an emotional connection trumps selling," Mr. Nowak said. "Because you like Target , you feel better buying your toothpaste there, even though you could get it at Walmart."
Much of PMH's identity is tied to its longtime client. That's why the agency hit a stumbling block last May, when it and Target announced that their relationship would be coming to end.
Target has since parted ways with another longtime shop, Wieden & Kennedy. It's also trying to replace CMO Michael Francis, who defected to rival JC Penney. (One of Mr. Francis' first acts was calling PMH.)
"It's fair to say we were a Target agency and did some project work outside of that , so the loss of Target was really a start-over for us," said Mr. Nowak. "We had been locked out of working with lots of brands from a conflict standpoint. But the other thing is it forced us to get really scrappy and hit the road [to] tell our story in a way we never had before. Everybody knew the work, but very few people knew it was us behind it."
PMH wants to do for JC Penney what it did for Target . The agency is also working on reviving Kmart's apparel and home-goods businesses, as well as picking up projects for Gap and sub-brands Piperlime and Athleta.
"If you say PMH and Target , the lightbulbs go off with marketers," said Mr. Beals at R3:JLB. "[PMH] is very well-regarded, and its work for Target is so well-known that it doesn't surprise me that clients came knocking." Plenty of Target 's competitors noticed, he added, and "when an agency does notable work, it can rebound faster."
And PMH has done that . The firm has since won every piece of business it has pitched and plans to keep going. As an indication of how busy staffers are, they had their end of 2011 party just a couple of weeks ago.