Gap Reviews Agency Assignments Outside U.S.
Clothing retailer Gap Inc. is conducting a creative and media agency review in markets outside of the U.S., sources said Friday. The company has been making an aggressive push to open stores overseas in recent years. It now operates in about 40 countries outside the U.S. including the UK, Japan and China. That’s up from just eight countries in 2006.
But up to now the bulk of the company’s media spend has remained in the U.S., where according to Kantar Media the company spent about $315 million on ads in 2011. Estimates of the company’s ad spending outside the U.S. varies, with some sources putting it in the $60 million-range, while others said it was lower.
A Gap Inc. spokeswoman declined to confirm or deny that a review was taking place. “Gap has not made an announcement in regard to an agency review,” she stated in an email response to a query about the reviews.
In December of 2010, Gap consolidated its global media planning and buying assignment with PHD, the Omnicom agency. PHD has been the U.S. incumbent since 2003 and added pan-European media duties in 2007. It is understood that the agency will participate in the latest media agency review. The shop however, declined to comment, referring calls to the client.
The company's decision to review agency assignments coincides with a global management realignment that Gap Inc. confirmed earlier this week. The reorganization takes effect in early 2013 when the company will consolidate its North American, International, Online, Outlet and Franchise divisions under a single global executive for each of its Gap, Banana Republic and Old Navy brands. The company said it would also form a new Innovation and Digital Strategy team to drive its efforts in the digital space. The online division was described by the company as “a stellar performer,” which is expected to deliver $2 billion in sales ahead of its 2014 goal. The company reported total sales last year of around $14.5 billion.
Gap Inc. CEO Glenn Murphy said that the reorganization was designed to boost the company’s global share of the retail clothing market. “The global teams will move even faster in anticipating and responding to the ever-evolving needs of customers, delivering consistently great product around the world,” Murphy stated.
Details of the creative agency review were not available. The company has used WPP's Ogilvy & Mather and MDC Partners' CP+B for creative work in the U.S. in the last couple of years, but it was not clear whether either was participating in the current review.