JC Penney Walks Out On DDB

Saatchi Expected to Land Retailer's $430 Million Ad Account

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NEW YORK (AdAge.com) -- JC Penney has ended its six-year relationship with Omnicom Group's DDB, Chicago, and is expected to move its $430 million advertising account to Publicis Groupe's Saatchi & Saatchi, according to executives familiar with the situation.
'DDB's partnership with JC Penny will come to an end,' said a DDB internal memo.
'DDB's partnership with JC Penny will come to an end,' said a DDB internal memo.

Memo reveals loss
Dana Anderson, DDB's president-CEO, Chicago, circulated a memo that read in part: "We are disappointed to tell you that DDB's partnership with JC Penney will come to an end. This evening, JC Penney President, Ken Hicks, called and said, 'You've been a great partner and done fantastic work, but we just felt it was time for a change.'"

Out of Wal-Mart, into JC Penney?
Saatchi, which just withdrew from the Wal-Mart review, is known to have made inroads with Penney recently. Wal-Mart is the higher-profile account, and the giant outspent JC Penney last year, with measured media outlay exceeding $580 million. But $430 million is still a hard-to-resist piece of business, and industry experts have suggested Wal-Mart is a lower-margin account.

The loss of the account is a blow to DDB, which just last week won the $200 million Safeway business. In recent months, it has also parted with its Dell Computer and Home Depot accounts.

DBB work worked
In the memo, Ms. Anderson listed several proof points of DDB's effectiveness on its Penney work -- best known for the "It's all inside" campaign -- including increases in both sales and the stock price. Same-store sales have, however, been marginally down year-on-year.
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