|Photo: Scott Breithaup|
|Julie Roehm: 'Our quest now is to become a big retailer that thinks small, and to do that, we need a targeted customer-marketing approach. DraftFCB has a new business model that's uniquely positioned to help us achieve our goals.' ALSO: Comment on this article in the 'Your Opinion' box below.|
How Howard Draft Wowed Julie Roehm and Won Wal-MartDraftFCB Wins Wal-Mart's $580 Million Ad Account
Retail Giant Rolls Dice on Newly Merged DraftFCB, with Eye on its Data Prowess
Carat to Handle Media
Advertising Age: So why DraftFCB?
Julie Roehm: The reasons for why DraftFCB edged the others out has a lot to do with our strategy here at Wal-Mart. We are a massive retailer able to derive benefits to customers because of our size. We're able to give a huge assortment at a great price. Our quest now is to become a big retailer that thinks small, and to do that, we need a targeted customer-marketing approach. DraftFCB has a new business model that's uniquely positioned to help us achieve our goals. Draft has a strong retail and direct-mail heritage. They're data-driven and consumer-target-oriented. That combined with FCB and its strong traditional yet creative bent felt like a complement to us going forward.
It's not about going upscale or downscale before any specific segment. We have 138 million people that go to our stores every week. Almost 82% of America shops us, and that isn't about upscale or downscale. By definition, it's everybody. But we have a choice of being really generic in our marketing, or we can think very specifically about what segments make up "everybody" in a more targeted and refined format, and it's the latter approach we're taking.
Ad Age: Was there concern that in choosing DraftFCB you're getting a company that doesn't have a lengthy operating history as a combined unit and is part of a parent company that -- it's no secret -- has had issues with agency mergers?
Ms. Roehm: We considered those things. The only way you get comfortable with that is spending the time we have. During the past seven months, we met with Michael Roth and talked in depth with him, and he gave us a great look at the financial health of the agency and expressed his commitment to this particular merger. And we spent a lot of time with Howard Draft, which is always educational and entertaining.
We did chemistry checks, something where we'd find if the agencies could reiterate the brief and had the credentials we needed, but they were also about seeing if they had chemistry among themselves. With DraftFCB and Carat working together, it was hard to discern who worked for whom. It was really a collaborative effort. There were also two agencies -- and I won't name them -- that were exceedingly strong on paper, but when you were in the room, you saw they didn't have chemistry with each other. We really covered a lot of ground during this. We're thinking of creating concert T-shirts that list every city we've been to. The band is called "The Pitch," and the album is called "Chemistry Check."
Ad Age: Can you tell us about what compensation structure you'll use?
Ms. Roehm: The Dream Team is an often-used, ill-acted idea, but having had a lot of time in the ad world, one of the frustrations is that you have a great slate of world-class agencies, but you spend a lot of time in couch sessions counseling one on how to work with the other or explaining why you went with one idea over another. We thought this was a clean slate to create a situation where that didn't exist.
All of the agencies will be grading each other, and that will equate to 30% of their bonus. The initial compensation will be based on large part on how we're bonused at Wal-Mart, on how we hit our stated internal goals of sales and profit. Whatever percentage we hit, that's the starting point; that's the top-line opportunity. From there, the full opportunity is based on quantitative measures and the peer review.
Ad Age: What are the peer-review metrics?
Ms. Roehm: The peer review will be a mix of qualitative and quantitative measures. The quantitative will be things you're familiar with: production budgets, timing, results on ROI measures, ad-testing. Qualitatively, it'll be based on things we're trying to finalize. You can imagine it'd be things like feeling as though you're part of the team, having an equal voice, sharing ideas, collaboration. They're softer, but they get to the heart of whether this is a team that's in-sync and working together toward the best ideas.
What often happens in the big-agency world in a multiple-agency situation is that you never hear about the big idea that gets squashed. You know there are agencies that are bitter because they didn't get their day in court, and that doesn't benefit anybody.
Ad Age: There's been talk around the industry that DraftFCB tried to snag the account by lowballing on price. Is there anything to that?
Ms. Roehm: I can tell you they were not the lowest. There were four agencies, and they were not the lowest or the second-lowest. What I will tell you is that one agency was pretty low and the other three finalists were lumped together in a normal range. DraftFCB was not trying to buy the business.
Ad Age: Did Roy Spence's interview in BusinessWeek during the pitch, in which he talked about Wal-Mart fees, have any impact on the decision?
Ms. Roehm: Absolutely not. I was actually hoping his conversation in BusinessWeek, where he floated a number of $10 million-$12 million, would have brought down compensation proposals. I thought that if everybody comes back with a $10 million fee then I'm in the money. And that didn't happen. We have nothing but the greatest respect for Roy Spence and the Omnicom team. He's been a great partner and nothing but a gentleman, and has committed in e-mails that he's going to help us transition smoothly. He wants us to succeed. And if you know Roy Spence, you know that comes from his heart.
Ad Age: Given Wal-Mart's historical rep for squeezing suppliers and vendors, was there a conscious decision made that you'd have to spend more for best-in-class services?
Wal-Mart PR person: You're dealing in stereotypes about us squeezing suppliers. There's a survey out that shows we're one of the best companies to partner with for suppliers.
Ms. Roehm: Yeah, that's probably more urban legend. The team that's put in place is tasked with getting the very best work and the very best price. All of us who joined Wal-Mart recently had success, but we haven't been spending our way flamboyantly to it. In terms of us spending more or less, rather than me directly answer your question, I'll tell you that the services we're asking for from agency partners are different than anything we've asked for in past. It's a fruit-to-vegetable question. What we're asking for is different, and that's why GSD&M was in the finals. We told them what we were looking for, and they partnered with PHD and a lot of outside experts and created a new offering, and that's what put them in the finals.
Ad Age: Tell me more about those services.
Ms. Roehm: Helping us to filter through information from a communications standpoint to be effective and efficient. One of the most impressive parts of DraftFCB's pitch was what I call the "The Wall of Fun." This is probably my engineering degree coming out as well as my University of Chicago quantitative marketing master's, but they came forward with six big flat-screens merged together, and it was this cornucopia of data showing what happens when you move your media mix and other things. And they did it without even having complete access to our systems. If we had this data here, we could give this information to [Senior VP-Marketing] Stephen Quinn's team to speak with merchants at Wal-Mart, who can devise plans, then toss it back to us to execute in a communications program. It was awe-inspiring. You could really see how the dots could be connected.
Ad Age: So then was data the key in Draft differentiating itself? Of course, you had Ogilvy & Mather as a finalist and it has a big CRM operation, but in Martin Agency you had a more traditional agency, albeit a very good one.
Ms. Roehm: I think people would have been impressed if they saw what we saw. You mentioned Martin. They had this guy who created this dashboard that could have helped us in planning, addressing when to insert messages and other things. He created it in just six days. We likened him to God himself. The data-focused stuff he was able to put together in six days -- and it was something you could see yourself using immediately -- was mind-blowing. Their creative presentation was excellent, and their interactive connection with R/GA was seamless.
We felt we would have been successful with any of the agencies. DraftFCB was pushed over the edge by their scale and their retail sensibility. They really just did their homework and understand our business. DraftFCB had the whole package at the top of the game.
Ad Age: Do you foresee Kirshenbaum Bond & Partners picking up work? There's some talk in the market to that effect.
Ms. Roehm: KBP didn't make it to final round. We were impressed, but their scale and size was a concern. We saw interesting work from them that could work in some of our categories. They have a real flair for fashion, for instance. I don't think it's out of the question that we might ask them to do project work for us.
Ad Age: Do you foresee a media-spending change, as far as allocation to media?
Ms. Roehm: It'll be a lot different. I don't mean to be flippant, but it'd be premature to speculate what it will look like. If you ratchet it up into a total media mix, it'll look different. It'll be most interesting in what it looks like in a certain region, in a certain category, in a certain time of year, for a certain customer. Stephen Quinn's team just completed a segmentation study, and we have great information on a refined level. We might speak to a customer in Atlanta at back-to-school time with one message in one medium that looks different from another woman in Atlanta that fits a different segmentation. That information's there now that we have the new marketing team at Wal-Mart and the new agency group.
Ad Age: Is it fair to say Wal-Mart has underleveraged its customer data in the past?
Ms. Roehm: What's fair to say is that marketing-communications organization is new. Before I got here, they had a creative department, a group that did work on store signs and promotional materials. Stephen Quinn and I were brought into change that philosophy.
Ad Age: Was there a tagline or new big idea that was pitched that you'll be going with?
Ms. Roehm: Whether we will go with one they pitched remains to be seen. We want to do more testing across a wide array of categories and customers. They were asked to pitch in a confined category and season. We asked them to consider brand positioning, and they were asked to consider the electronics department and back-to-school time period. But that wasn't the reason for the pitch. It was not to come up with a new tagline or ad campaign. The reason for the pitch was find a new partner or take a partner we had to a new level.
Ad Age: You mentioned before that Howard Draft is, among other things, entertaining. I hear you got to take a ride in his Aston Martin. Can you tell me about that?
Ms. Roehm: He does have an Aston Martin, and I got to go down and sit in it because I'm a car nut. We were out and he asked if I wanted to drive it around the block. I said, "Wow, could I?" So I got in and it didn't start. He had to have it towed.
Ad Age: You obviously didn't hold the engine problem against him.
Ms. Roehm: I can assure you I had nothing to do with it.