After a long and drawn-out process, Sears Holdings has finally wrapped up the review it began last year, keeping Havas and hiring Publicis Groupe in a holding company-level agency restructuring.
Interpublic Group of Cos., the third holding company participating in the review, will lose the Kmart business currently handled by FCB, though the IPG shop will continue to work on this year's holiday campaign.
Havas will now be the agency of record for Kmart and will retain the Sears Holdings Corp. mass-media assignments, which include some elements of digital. Havas will also retain its status as agency of record for the Craftsman, Kenmore and Diehard brand group, which was out of scope for this project, the company said.
Publicis Groupe, which wasn't on the Sears Holdings roster, is being awarded AOR duties for the Sears brand and is taking on digital responsibilities for Sears Holdings Corp.
Sears is still working on scope and exact agencies within the holding companies that will handle the work, but said it will have dedicated groups to support media, creative and digital within each.
When the company began the review last November, it reached out to all the major holding companies to participate, but delays set in several times. A request for proposals wasn't sent out until well into 2015. The review was later scheduled to be completed by the end of August, but another round of meetings was sprung on participants toward the end, according to people familiar with the matter.
An FCB spokeswoman declined to comment.
"The three finalists showed a range of great thinking and passion and they invested great resources that really impressed us," said Bill Kiss, VP and chief digital marketing officer for Sears Holdings, who led the process and will now oversee the agency restructuring. "The primary focus of this has always been to accelerate our transformation here. It's not a turnaround. It's a transformation. We were looking for partners that could help us in that transformation of Sears and Kmart, bringing back those iconic brands, and that could help us find the best way to unlock the true big potential of the 'Shop Your Way' platform. We've had a lot of changes and we're doing a lot of good work this year. We added good leaders around the table, and the process has evolved a bit for all right reasons."
According to one person familiar with the matter, as part of the review the company was also asking holding companies pitching the business to suggest Sears' Shop Your Way rewards program -- a part of the company that chairman-CEO Eddie Lampert has made a priority -- to other clients as a potential media buy. Holding companies' other clients might buy ad space, for example, on a Shop Your Way email.
The company is badly in need of a sales turnaround. In the second quarter, Kmart and Sears domestic comparable store sales declined 7.3% and 14.0%, respectively. The results were "driven in part by highly targeted promotional and marketing spend to better align with member needs, and a shift away from low margin categories, such as consumer electronics," the company said in its earnings statement.
Interpublic's FCB had a long history with Kmart. In more recent years, the agency created the "Ship my pants" and "Big gas savings" efforts, which garnered a great deal of attention. Havas has also long handled media for Sears. McGarryBowen had worked on the Sears brand, but the two parted ways in February. Havas, according to people familiar with the matter, had picked up some Sears business in the wake of McGarryBowen's departure, but it didn't necessarily mean the shop was a shoe-in for the account.
After Sears reached out to holding companies last year, several senior-level executives were named or left. The most senior marketing departure was Imran Jooma, the company's exec VP and president of marketing, online and financial services, who said in December that he was leaving the company.
Kelly Cook was named CMO in June, succeeding former chief marketer Andrew Stein, who exited the role to join Big Lots in 2013. Kmart creative Mark Andeer subsequently left the company, and the retailer made personnel, structural and process changes to its marketing team as part of an effort to evolve the brand's overall marketing.
Sears has long been described as a demanding client. In 2011, when it was reviewing the Sears brand business that McGarryBowen ultimately won, it upset many agencies when it said that it would own the ideas that agencies pitched. Other people familiar with the marketer have said that the company over years has continued to cut its agency fees.
Sears is the 40th largest advertising in the U.S., according to Ad Age's DataCenter, with a total of $974.4 million on both measured and unmeasured spending. The company spent $430.4 million on U.S. measured media, according to Kantar Media, with $256.8 million going to Sears and $155.2 million on Kmart. Both brands significantly decreased their measured spend from the prior year: Sears had spent about $340 in 2014 and Kmart spent about $209 million.
This review was not about spending, and with the new agency structure the company could ultimately spend more, Mr. Kiss said.
Of the length of the review, he said, "We've had a lot of change here in terms of key leadership roles. We've brought on a new CMO on the Kmart side, a new president of Sears." He added that the company took its time for "due diligence."
"We want to make sure in this journey we got the best partners," Mr. Kiss said. "We won't do speed for speed's sake."