Amid Turmoil, JC Penney Puts Feelers Out for New Ad Agency

Sergio Zyman, the former Coca-Cola Marketer, Has Stepped in as De Facto CMO

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During his tumultuous 17 months as CEO, Ron Johnson played a key role in JC Penney's marketing. In his absence -- and in the wake of the departure of several marketing execs -- Sergio Zyman, the polarizing former Coca-Cola marketer, has been entrusted to begin charting a new path for the retailer.

Sergio Zyman
Sergio Zyman
To many, it will seem a surprising choice, given Mr. Zyman was part of one of the biggest marketing blunders in history: New Coke. The Mexican marketing pundit, known for his flamboyant personality, was first publicly revealed to be working with JC Penney during a conference call with analysts, in which it he was credited with working on the retailer's Oscars ad campaign, "Yours Truly." Even before Mr. Johnson's departure and the return of former CEO Mike Ullman, Mr. Zyman had started quietly talking to agencies about handling advertising for JC Penney, said several industry executives.

There are other changes afoot. Mr. Zyman and The Bureau, which created the "Yours Truly" campaign that aired during the Oscars, recently ended their relationship. "The 'Yours Truly' work we did for the Oscars was done on a project basis," said Tom Suiter, a creative at The Bureau, noting the shop's work for JC Penney wraps up in May. "We recently made a mutual decision with Sergio Zyman that The Bureau doesn't offer the type of creative and services he needs going forward."

Since Mr. Johnson took over, the retailer has worked with smaller shops, including Peterson Milla Hooks and Mother. But under the new management, that could change.

Execs said that Mr. Zyman is keen to work with a big, integrated agency that can serve as a one-stop shop. During his tenure at Coca-Cola, which he left 15 years ago, Mr. Zyman had relationships with a number of shops, including McCann Erickson, Leo Burnett, BBH, Wieden & Kennedy and Berlin Cameron. After that he spent a number of years consulting at Zyman Group, which was owned by MDC Partners, and he still operates another consultancy called Sergio Zyman & Co.

Despite the moves Mr. Zyman has been making at JC Penney, the return of Mr. Ullman as CEO could also mean the retailer will turn to old friends. Saatchi & Saatchi handled the business from 2006 until late 2011, when Mr. Johnson came onboard. Mr. Ullman and former CMO Mike Boylson fell for Saatchi CEO Kevin Roberts and his "Lovemarks" concept, eventually shifting the account to Saatchi from DDB. Mr. Ullman heard Mr. Roberts speak at a conference and filled in his chief marketer while the two were traveling on a corporate jet, sketching out the axis of love and respect -- Mr. Robert's way of understanding how consumers relate to brands -- on a cocktail napkin.

Kate Coultas, a JC Penney spokeswoman, said it is "way too early to speculate" about the status of marketing leadership or agency relationships at the company.

Mr. Johnson's departure gives Mr. Zyman even more power over marketing decisions, executives close to the company said. Indeed, when President Michael Francis, who had been leading marketing and merchandising, departed in June, Mr. Johnson assumed direct oversight of those functions. Mr. Johnson did not hire a chief marketer, handling some of Mr. Francis' former duties right up until his departure.

In the past six months, Sissie Twiggs, VP-media for digital marketing; Lisa DeStefano-Orebaugh, VP-strategic marketing; and Greg Clark, VP-creative marketing, have left the retailer. That leaves a major dearth of marketing leadership for Mr. Ullman to contend with.

Any agency taking on the JC Penney business, or any marketers joining the retailer, have an uphill battle --and an uncertain future, given the lack of a permanent chief marketing officer. The retailer saw sales plummet to $13 billion, the lowest level since 1987, even as measured media spending rose 14% to $504 million. Mr. Ullman, 66, was also not the clear choice to succeed Mr. Johnson, 54. The company's stock closed down 12% the day after Mr. Ullman's appointment was announced.

"Mike Ullman was certainly not the top-of-mind candidate to replace Ron Johnson, but he does come with certain attributes. He knows his way around all JCP constituents and has a passion for the business," said Michael Exstein, an analyst with Credit Suisse. "But he must be viewed as an interim appointment, meant to stabilize the situation."

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