NEW YORK (AdAge.com) -- Home Depot is moving its $37 million U.S. Hispanic account to Richards/Lerma, a little-known Hispanic capability fielded by Home Depot's general market shop Richards Group, from incumbent Vidal Partnership. The account shift, a stunning upset for Hispanic ad agencies in general, is the clearest example yet of general market agencies' growing attempts to persuade cost-conscious clients to consolidate their Hispanic accounts with their general market agency.
It was considered extremely surprising that Richards/Lerma even made it to the final round against incumbent Vidal, one of the top Hispanic ad agencies. Vidal is the No. 2 Hispanic agency by revenue and the biggest independent. Two other leading Hispanic shops, Alma DDB and Lapiz, owned by Leo Burnett, also pitched but were told earlier they hadn't made it.
Frank Bifulco, Home Depot's VP-chief marketing officer, said in a statement: "As part of our on-going process of periodic supplier reviews, we have spent the past few months in an intensive Hispanic agency capabilities review. We received dozens of inquiries from many of the top Hispanic agencies and considered numerous potential contenders. We were supported in this endeavor by search firm consultant, Select Resources International. We are pleased to announce that we have selected Richards/Lerma, in partnership with Initiative/Identity, as our agency of record, and look forward to building a productive relationship with our new partners. Further, we want to acknowledge and sincerely thank The Vidal Partnership for all of their efforts over the past six years."
The decision is believed to have been controversial within Home Depot, with senior management making the final decision.
Richards/Lerma is headed by Pete Lerma, who is the principal at Click Here, Richards' digital agency. Mr. Lerma had earlier declined in an e-mail to discuss Richards/Lerma, saying, "We don't talk about ongoing new business efforts," and gave a web address, richardslerma.com, for further information on the agency. A link to a Spanish-language version of the site didn't work, but the English-language site lists five people at Richards/Lerma -- founder and principal Stan Richards; Mr. Lerma; Nancy Morkovsky, director of brand planning; Tony Diaz-Albertini, in brand management; and Jessyca Gonzalez, brand manager. Mr. Richards is believed to have attended the final Richards/Lerma pitch along with Mr. Lerma and Initiative Media.
The site also lists Richards clients that Richards/Lerma says it has done Hispanic work for, and links to YouTube where Mr. Lerma posted three Spanish-language commercials on June 22, 2009. The spots are for Fruit of the Loom, featuring the Fruit guys driving around in a lowrider car, the Salvation Army and Advance Auto Parts. Fruit of the Loom has a Hispanic agency of record, but it's a different agency, Grupo Gallegos.
Home Depot has been conducting an exhaustive series of reviews of all it's ad and marketing-services agencies mandated by a new procurement process.
The last review in this cycle of pitches is starting now, for African-American advertising. The incumbent, WPP-backed Uniworld, plans to defend the business. It's unclear whether Richards will field a contender in that segment, too. A decade ago Mr. Richards and Terence Reynolds, an African-American creative at the agency, started subsidiary Shift Advertising, described as "dedicated to understanding cultural trends in the urban market" on the shiftadvertising.com website, much of which appears to be still under construction.
By and large the reviews have been kind to incumbents until now, starting with Richards Group's own re-appointment to the almost $600 million Home Depot business, the agency's largest account, in December 2008. In the next review, media was consolidated at Initiative, which already controlled traditional media planning and buying duties, and picked up digital, newspaper and search, in April 2009.
Agencies said the review for Hispanic creative and media consisted of four separate stages -- credentials, chemistry, concepts and creative. Among the finalists, Alma DDB made it through several rounds, and Lapiz, Leo Burnett's Hispanic agency, was dropped after the final round of presentations the week of Feb. 22, leaving Vidal and Richards/Lerma, believed to be working with Initiative.
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Contributing: Natalie Zmuda