BATAVIA, Ohio (AdAge.com) -- Recession has made Walmart arguably the most relevant -- and powerful -- brand in the U.S. Now Stephen Quinn, chief marketing officer of the U.S. division, is out to make sure that lasts after things get better.
The soft-spoken veteran of such blue-chip marketers as Procter & Gamble Co., Johnson & Johnson and PepsiCo has led an unprecedented increase in ad spending by the always-frugal retailer, which upped its outlay 66% to $840 million last year, according to TNS Media Intelligence. He's given marketing a seat at the table alongside the operations and merchandising executives who long dominated Walmart.
He's helping lead the rollout of a high-tech video Smart Network that tracks ad results in real time and changes the rules in Bentonville by letting marketers essentially buy endcaps, or displays at the ends of store aisles. He's also behind efforts to update the company's brand with a new logo and in-store branding and a "Save money. Live better" ad campaign that aligns the retailer's advertising with its mission statement while also focusing squarely on its good deals amid the recession.
In an interview with Advertising Age, Mr. Quinn explained how and why Walmart is changing, including reformatting for the digital age and embracing the Long Tail.
Ad Age: It looks like after a big run-up in ad spending last year, you pulled back some this year. Do you need to spend at leadership levels when you have so many people coming through your doors anyway?
Mr. Quinn: The second half of that is true. We are fortunate that we've got a lot of traffic that is anchored in some really core categories like groceries. We haven't really approached our advertising as a share-of-voice game. But we've built marketing-mix models, as a lot of marketers have, and we've really been using ROI as the determinant of how we should be spending. I guess we did slow down a little bit in the first part of the year. It wasn't a pulling back. It's just that retail skews so heavily [toward the back half of the year]. But we've been really happy about the return we're getting.
One thing I can promise you is that Walmart is a pretty tight ship when it comes to costs, and there is no way that anybody would have approved the spending if they hadn't felt it was going to pay out.
Ad Age: Will digital become the central piece of Walmart's marketing?
Mr. Quinn: It might become the central area, but not the way most marketers would look at it, the reason being that we have a very large, very successful website.
It's already one of the highest performing media for us on an ROI basis. And as a result you've seen our investments increase substantially there. Mobile is going to become really important, just because we have places where people are outside of their homes.
The business model underlying a lot of digital [is like what] Sam Walton created. If you think about how a Google works, we all go in there and, by using it, change what gets served up, because the algorithm they have can tell what's popular. That's how Walmart at its best is supposed to work as well, so your purchases today send a signal to our business, our replenishment system and our merchants.
Ad Age: How are you integrating Walmart and Walmart.com?
Mr. Quinn: One of the biggest connections between the stores and Walmart.com has been the creation of this Site to Store program. It's this online service that provides the so-called Long Tail of greater variety that can be shipped to your store for free. Our belief is that over time the assortment available to customers could be virtually unlimited.
Ad Age: How is the Smart Network rollout going?
Mr. Quinn: We're learning how much smarter we can get when we really use this tool, when we really pay attention to the stimulus and response. We all know [video is] going to be a part of the future of retail. I don't think many people would take the opposite position that a bunch of cardboard and [point-of-sale material] are going to be around 20 years from now. We've got the technology. Now we need to build the content.
Ad Age: When video is built into the end-aisle displays, it looks like for the first time somebody can coordinate an ad buy with a merchandising display. But it's also culturally different for Walmart. Has it been a point of contention for anybody that now you can buy an endcap?
Mr. Quinn: Yeah, it has been. But it's been the same point of contention in getting any of this stuff coordinated. Internally, we may have been a company five years ago where everybody wanted to do their own thing inside of a silo. The biggest thing that's been changing is asking people in the company to step up to the challenge of all that coordination it takes to work with peers outside of your silo to benefit your customers.
Our vendors and our customers and we can see it's a lot bigger idea when you can say: This is a great new product, and we're going to put it on endcaps and advertise it on those endcaps, and make sure our circular has that and possibly our TV and internet. What was frustrating for vendors was that the buyer agrees the product is a powerful idea. They put up a display, but the advertising was about something else and the circular was something different all together. I'm not aware of any arm twisting that's taking place. We're trying to provide real value for vendors.