Walmart is dropping R/GA as its digital agency of record after a three-year relationship, the retailer said.
"As part of our continuous efforts to evaluate business needs and strive for more efficient ways to serve our customers, we made a decision to consolidate our marketing agency relationships," Walmart said in an email statement. "As a result, we are releasing R/GA, and the Martin Agency will manage our digital-marketing needs."
The move comes as Walmart has stepped up digital efforts related to e-commerce in the past year, with the retailer's Mountainview, Calif.-based @WalmartLabs unit having recently handled some duties normally within the scope of a digital agency assignment. That includes developing new iPad and iPhone apps, a Facebook app to make gift suggestions for friends, and the development of a new search algorithm for Walmart.com. In an August interview, Venky Harinarayan, senior VP of e-commerce for Walmart, said @WalmartLabs is "helping with marketing" for the retailer's global online properties.
Walmart also recently handed project work to Omnicom's digital agency, Organic , San Francisco, according to people familiar with the matter. Walmart declined to comment on that and a spokeswoman for Organic didn't return calls for comment. Both R/GA and Martin declined to comment.
Walmart spent $874 million last year on measured media, according to Kantar Media, $58 million of that on internet display. Spending overall and on internet display were both down sharply in the first half of 2011 vs. the year-ago period, with overall spending down 52% to $232 million and internet down 49% to $15 million. But Bill Simon, CEO of Walmart U.S., told an investor conference last month that the retailer plans to double advertising "volume" or impressions this holiday season vs. a year ago.
The mega-retailer and R/GA have worked together since 2008, with R/GA largely handling social media and charged with increasing engagement on Walmart's Facebook page. Currently, the page has nearly 10.5 million fans and recently added a My Local Walmart feature that lets fans sign up for deals and information such as store maps directly from their local stores. To a smaller extent, R/GA was tasked with creating online banners and other digital ad executions.
R/GA, New York, joined Richmond, Va.-based Martin on Walmart's roster following a review. Originally Martin, named Walmart's creative agency in 2006, had also been tasked with digital work. But people familiar with the matter said that didn't work out, and Walmart worked extensively on a project basis with digital shops, particularly Resource Interactive, Columbus, and Rockfish, Rogers, Ark., before calling the review that led to R/GA being named.
Walmart's contract with R/GA is understood to be in force through the end of the retailer's fiscal year at the end of January, which means the lost revenue won't hit the agency's books in calendar 2011. It's a rare loss of a client for R/GA, which will need to work hard to replace the Walmart business next year. But not having Walmart on the roster opens up a range of new opportunities for the shop, since the retailer is so strict about conflicts.
Regardless of how much digital work it ends up doing, Martin has received hearty approval for its TV work at a host of recent public appearances by Walmart executives, who've showed off ads highlighting the return of layaway after a five-year hiatus and a tear-jerking spot showing a soldier mom returning home from overseas.
Mr. Simon told investors last month that Walmart, besides ramping up TV spending, will increase holiday print spending from a year ago behind seven tabs, 10 freestanding inserts, a toy catalog and a holiday entertaining guide. But the company's only mention of internet display and search last month had to do with stepped-up weight behind Walmart.com in urban areas where the retailer has few stores.
"If you don't see Walmart on TV, call Bill Simon," he said. "Because you're not watching TV."
Contributing: Kunur Patel