BBDO bested fellow Omnicom shop DDB Worldwide, Chicago, and Grey Global Group's Grey Worldwide, New York, in the final round of a four-month review. Initially 20 agencies were contacted. Jones Lundin Beals, New York, consulted on the review.
Mike Haaf, exec VP-marketing at the Florida-based retailer, said in addition to the creative product BBDO offered, the agency won based on its global presence and ability to integrate communications, just as the retailer is integrating Web offerings into its own stores. Office Depot hopes also to capitalize on its database of customer information, he said.
In addition, BBDO interactive unit @tmosphere will play a role in online advertising, while Omnicom shop Rapp Collins Worldwide will handle
direct marketing, and MarketStar will oversee local marketing.
"Essentially either through BBDO or a combination of Omnicom resources we'll be handling most of the communication elements, including PR, online advertising, offline advertising, direct marketing and [customer relationship management]," said Bill Katz, president and co-CEO, BBDO New York.
Media buying, which was not part of the review, according to Mr. Katz, is "up for discussion."
Broadcast planning and buying remains at Havas Advertising's Media Planning Group, formerly SFM, New York, Mr. Haaf said, adding a change was not occuring "at this point" but hinted a review in the future was possible.
Office Depot's most recent work featured the theme "Taking care of business." Ads were created by previous agency Gold Coast Advertising Associates, Miami, which handled the account on and off since 1987. The account also shifted briefly in 1996 to WPP Group's J. Walter Thompson, Chicago, and in 1999 to DeVito/Verdi, New York.
Mr. Haaf wants to move his company's advertising "creative to more clearly express our ability to offer solutions and services as well as products to our core customer," the small and home-office businesses. As to whether he will continue "Taking care of business," Mr. Haaf said, "Everything's up for grabs. There are no sacred cows."
Agency executives familiar with the review said billings would be more than $50 million, but Mr. Haaf said he expects advertising spending to remain flat this year. In 1999, the retailer spent about $105 million in measured media, and last year spent $117 million, according to Taylor Nelson Sofres' CMR.
Office Depot spent $255.8 million on advertising worldwide last year, including a large direct-marketing ad effort, according to a Securities and Exchange Commission filing.
The agency shift comes at a time when Office Depot, along with its two prime competitors, Office Max and Staples, find themselves at the end of a 14-year run of rapid growth and expansion and locked in a battle for market share. Wall Street analysts applauded the retailer's recent move to close 70 of its 820 stores. That, combined with Office Max's decision to close 50 stores, has led to the view that capacity reductions among office-superstore chains will bode well for the sector, according to a recent report by Goldman, Sachs & Co.
Office Depot reported 2000 sales of $11.6 billion, up 13% over the previous year, and up 7% for stores open at least a year. But with the economy slowing, Office Depot early this year warned first-quarter same-store sales would fall.
Office Depot executives believe their stores will do well in this economy because "when it comes to office suppliers, selling a need-based product" such as pens and pencils is not difficult, said Eileen Dunn, VP- investment relations.
Agreed Mr. Katz, "We believe the salient attributes we will ultimately highlight are compelling irrespective of whether business is good or bad and people are spending or not."