When It Roehms It Pours: Wal-Mart Dumps Draft FCB, Invites Carat To Pitch Anew

In a sudden, stunning reversal of fortune, mega-retailer Wal-Mart Thursday rescinded its recently awarded $580 million advertising account, pulling it from Interpublic's Draft FCB unit and inviting media agency Carat to pitch the business all over again. The jaw-dropping move was the second--and even heavier--shoe to drop, following news earlier this week that Wal-Mart had dismissed colorful marketing executive Julie Roehm, and her subordinate, Sean Womack, who presided over the eight-month review resulting in an unusual joint win by Draft FCB and Carat.

"Earlier today, we notified Draft FCB that we would reopen the bid process and they will not be eligible to participate," Mona Williams, a spokesperson for Wal-Mart, told MediaDailyNews Thursday evening. "Carat will be invited. If they want to bundle with somebody else, they are welcome to." She added that Wal-Mart is open to working with another Interpublic shop.

Williams said the decision was made because of "new information we have obtained over the past few weeks." She declined to provide further detail, but added that because of the work accomplished during the original process, the review would proceed quickly, with a new agency named by the end of January.

advertisement

advertisement

"I can confirm that we were invited to re-pitch Wal-Mart and will be participating," said Carat spokeswoman Adrienne Scordato, but declined to answer other questions about Carat's relationship with Draft FCB, which jointly pitched Wal-Mart's business in the original review, acting as an integrated advertising and media agency team.

According to the original review specs, Wal-Mart allowed teams of agencies to pitch its overall account as long as they represented "best in class" capabilities. A number of brand agencies were paired with media units within their parent companies during that pitch, but Draft FCB and Carat were the only unaffiliated team.

The big question for Carat is whether it is in a position to affiliate with a best in class brand shop during the restaged review, or whether it would be permitted to pitch the business on a standalone, unbundled basis.

While neither shop commented on the details that led them to win Wal-Mart's business in the first place, it's believed that a strong part of the decision had to due with superior research, analytics and database marketing services offered by the unique pairing of Draft FCB and Carat. Draft FCB is a new kind of agency on Madison Avenue, created by the fusion of a leading direct marketing shop, Draft, and a renowned brand agency, FCB, and is believed to have developed better ways of integrating the science of direct response and database marketing with the power of brand advertising. Carat, meanwhile, is well known for consumer insights and media research innovations, and is also tied to MMA, the nation's leading marketing mix modeling firm.

With such a short time frame, it's likely that other finalists in Wal-Mart's first review -The Martin Agency, Ogilvy & Mather and incumbent GSD&M - or Wal-Mart's long-term independent firm Bernstein-Rein, which held the business in combination with GSD&M, would be awarded the account. Wal-Mart's Williams acknowledged but would not confirm this fact, saying: "All that's still being worked through. We should know soon."

The high-stakes development is the latest chapter in what has turned into the drama of the year on Madison Avenue, and one that has been seeped in plenty of gossip and oodles of personal innuendo that had only been alluded to in the trade press until a front page story in this morning's New York Times confronted allegations of personal improprieties by Roehm and her associate Sean Womack head on. In the Times story, both Roehm and Womack denied they had a personal relationship that violated Wal-Mart's fraternization policies, or that they separately violated rules prohibiting Wal-Mart executives from accepting gratuities from vendors and sub-contractors.

Speculation, rumor, and gossip have been spreading through the advertising community like wildfire on the open prairie following Roehm's and Womack's abrupt departure from the big box retailer.

Several sources close to the review process, speaking on the condition of anonymity, said Roehm was never a good fit inside the company's culture, but had increasingly become persona non grata to Wal-Mart because of her behavior during the review and inside the organization. "They're burning everything she touched," said one source.

During the review, Wal-Mart's strict "non-gratuity" policy was breached, several sources confirmed, by at least two of the agencies and likely more. Roehm also operated more as a lone wolf than a team player, and did not keep enough executive-level management abreast of her progress or ultimate decision, further rankling top brass. Wal-Mart also got wind of a full-page ad in Creativity magazine from Draft FCB promoting the Cannes Lions awards, that depicted two lions copulating with the caption "It's Good To Be On Top," which spurred much negative talk inside the company.

The easiest move for Wal-Mart at this point, speculated several sources, would be to simply keep the business at GSD&M and Bernstein-Rein, who continue to work on the account and may provide the traditional agency link that Wal-Mart decides it needs as it re-evaluates how it was to be perceived. With its weakest sales in a decade, the Bentonville, Ark.-based mass retailer may be moving more toward a mantra of improving the image it has a discounter, rather than trying to reposition itself as a store known for quality.

"Nothing has gotten simpler for Wal-Mart," said Richard Hastings, a retail analyst with Bernard Sands. "Everything has gotten more complicated. I'm going to speculate that Wal-Mart executives may realize that much of the imaging and branding efforts they've talked about are not going to achieve the results they thought they would a year ago, when they really started to ramp these marketing programs up."

"The deterioration of sales momentum happened much faster than anyone anticipated," he continued. "In the U.S., they may have been maturing. It happens. But because sales momentum is off, and customer loyalty is off, they may be better off focusing on improving the store experience for people."

The toughest situation may be the one facing Carat, which presented an integrated marketing strategy as Draft FCB's media partner, and now finds itself in a Super Bowl of agency reviews without a defense. And when it comes to mating animals, Ogilvy & Mather recently one-upped Draft FCB with a 60-second commercial for AIDS awareness that shows a menagerie of creatures in the act.

Spokesmen for Draft FCB and Interpublic both said they were "disappointed," but declined further comment.

Spokesmen for The Martin Agency, GSD&M and Bernstein-Rein referred calls to the client.

Joe Mandese contributed to this story.

Next story loading loading..