Home Depot Scrutinizes Roster, Trumpets Value
NEW YORK (AdAge.com) -- Frank Bifulco may be on the verge of capping what has been a tumultuous period in Home Depot's CMO suite. Advertising Age called the post "anathema" in 2006, as the retailer struggled to find and keep a chief marketing officer. But Mr. Bifulco, a veteran of Procter & Gamble and Coca-Cola, will mark two years in the role come April -- the second-longest stint among the five CMOs the retailer has employed this decade -- and the changes he's making appear to be resonating.
Internally, Mr. Bifulco, most recently chief customer officer-president of Hasbro North America Sales, said the marketing team is better aligned with the retailer's merchants, partly as a function of his reporting to Craig Menear, exec VP-merchandising, rather than the CEO, as past CMOs had done. Externally, he's led the shift to the new tagline, "More saving. More doing."
Sales for the third quarter totaled $16.4 billion, an 8% decrease from the third quarter of fiscal 2008. Comparable store sales for the third quarter were down 7%. But the new campaign is a step in the right direction and has been driving traffic, Mr. Bifulco said. "Our brand had been a little disconnected, in terms of our brand promise, 'You can do it. We can help,'" he said. "It didn't contain an overt callout of the value we can provide." Home Depot spent $480 million in measured media in 2008, according to TNS Media Intelligence.
Mr. Bifulco has also spearheaded a new agency-review process in which every one of the retailer's agencies is regularly assessed, beginning in July 2008. It's an exercise that has saved money and cut agencies by about 10, Mr. Bifulco said. But it's also raised the ire of some agency participants.
Coming off Black Friday, Mr. Bifulco talked in detail about the new agency-review process and attempted to dispel any notion that it's all about squeezing agencies. He also explained why he believes retail marketers should be more closely aligned with merchants, and why value messages will resonate long after the recession.
Ad Age: How did the first week of the holiday season go?
Mr. Bifulco: I can't share exact numbers, but we felt pretty good with the performance of last week, Black Friday week. What we have found, and what you'll see as we go forward, certainly we'll have a good representation of items used as gifts, so you'll see us with great gifts under $10, $20, $50. But we're not backing away totally from our project business. [And] at the end of the day, people still need appliances during the holidays.
Ad Age: Prior to your joining, there had been quite a bit of movement in the marketing suite. Do you feel like you've brought stability?
Mr. Bifulco: I'm hopeful that's what it in fact is. One of the things that has made my job a little different than successors is we're now part of the overall merchandising organization, so I feel marketing as a function is much more strongly connected to the mainstream of our business. I do think we are much more strongly aligned than we've ever been internally and, because of that, addressing marketplace challenges much more effectively.
Ad Age: How has reporting into merchandising, rather than the CEO, affected your role?
Mr. Bifulco: Coming from a CPG background, this is my first stint in retail. To be successful at the Home Depot, probably at any retailer, you have to acknowledge, and rightfully so, that this is a product-driven, merchandising-driven enterprise. In a retail environment you have to put a different perspective on that; being part of the merchandising organization forces marketing to be closer to one of our principal clients, the merchant team. Organizationally it makes us closer and facilitates communications, but quite candidly I believe it's the way it should be.
Ad Age: Do you have a direct connection with the chief financial officer and CEO to discuss things like marketing budget?
Mr. Bifulco: Absolutely. We have a very frequent and transparent management routine here where I have plenty of interactions with our CEO, Frank Blake; and CFO, Carol Tom?. Certainly there's no organizational barrier to advocating a particular position that I would have that's either associated with budgets or programs or whatever.
Ad Age: The new agency-review process was also instituted, in part, because regular reviews are something merchandising does, correct?
Mr. Bifulco: Partly. Last July  we alerted all of our agency partners that we were going to do, on an ongoing basis, agency reviews. You might say that's similar to what our merchants go through with product-line reviews. I'd put a little bit of a different spin on it. As I looked at the overall purpose, there were probably three [reasons for] doing this. It makes sure that our partners weren't in a comfort zone, that we were continuing to push ourselves with strong ideas. Secondly, we wanted to make sure we were getting all of the capabilities and competencies that that partner could provide to us. Third, to see if there were entities out there that would better serve the Home Depot and give me a better chance to employ our marketing spend a little bit differently. And if I were able to take cost out along the way, for greater value received, that was fine as well.
Ad Age: It seems like this is also procurement-driven. Have you saved money?
Mr. Bifulco: Across the board, I'd have to say yes, but it's a little bit of apples and oranges. As I look at what has transpired since we've done these reviews, it's fewer partners doing more business. At the end of the day, the total outlay of money from the Home Depot is less. That's not to say that any individual agency is getting less. Is procurement involved in our process? You bet. These people are very knowledgeable when it comes to cost and negotiation. At the same time it's a marketing-driven agenda, in terms of the scope of work that we're looking for and the outputs we need to steward our business and brand appropriately.
Ad Age: You have stuck with a lot of the incumbent agencies during this process, however. From the outside looking in, it seems like an exercise in squeezing your current agencies.
Mr. Bifulco: I reject that comment. I go back to the fact that we wanted to run a process with rigor and integrity. I wouldn't put my team through a needless exercise nor would I put an agency through a needless exercise. If it were only to take cost out, I'd have that dialogue with the incumbent. There are situations where we're actually paying an ad agency more money, because we've consolidated into one entity and I'm dealing with fewer strategic partners.
Ad Age: The new campaign "More saving. More doing" launched in September 2008 and replaced "You can do it. We can help." How has that shift resonated with consumers?
Mr. Bifulco: Very well. We've been tracking it since our launch, and awareness is building. When I look at brand-health metrics, total awareness [and] top-of-mind awareness are all up. More importantly it's impacting behavior, meaning consideration and visitation, across the past month, past three months and past 12 months. Those numbers continue to increase.
Ad Age: What about when the recession is over? Does that kind of value message still resonate?
Mr. Bifulco: We looked into that exact issue, and it's equally as relevant. We're going to move from conspicuous consumption -- a lot of consumers buying things whether they needed them or not prior to tough times -- to this notion of conscious consideration -- [this idea of] I work hard for my dollar, and when I spend it I want to make sure I get the best price, best value but also quality and innovation.