BrainTrust Query: Will Wal-Mart’s Appointment of an ‘In-Store Agency of Record’ Spark a New Trend?

Discussion
Aug 22, 2006
Laura Davis-Taylor

By Laura Davis-Taylor, Founder and Principal, Retail Media Consulting

(www.retailmediaconsulting.com)


Last week, Wal-Mart stores appointed agency Saatchi & Saatchi X agency of record for their shopper, in-store and associate communications. In positioning the news, Julie Roehm, Wal-Mart’s Sr. Vice President of Marketing Communications, said, “Wal-Mart continues to evolve its experience with shoppers and associates. How we connect and communicate with them is of great importance to us.”


The agency will direct all in-store media used to reach shoppers, including the programming on its in-store TV network.


This news is a potential catalyst to both the retail and advertising industries, as it is the first formal agency of record (AOR) appointment of its kind with a major U.S. retailer. Clearly, Retail Media is a term — and service offering — quickly gaining credibility.


However, questions arise as to how an “in-store agency of record” interfaces successfully with the established stakeholders in charge of traditional merchandising, POP and burgeoning digital signage networks. What is considered Retail Media versus traditional merchandising real estate? Further, how is it separated from the store design teams’ responsibilities?


It will also be important to see if Saatchi X will have success leading the
effort as a singular resource. After all, they will be driving an enormous shift
in store communications strategy, processes, and execution.


Discussion Questions: Can an outsourced agency successfully
manage the dizzying array of constituents that will be involved in making this
happen? Or, would Wal-Mart have been better off appointing an internal lead
to work with the In-Store Agency and slowly transition the corporate camps?


Having started my career in the advertising industry,
it was always shocking to me that the Agency had so little to do with the brand
strategy of the retail store environment. It made no sense, as they were making
the most vocal consumer promises yet had little involvement ensuring that those
promises were kept. From the retailer’s perspective, this had to do with the
fact that the Agency simply didn’t understand merchandising, customer experience
design and the operational realities of activating programs in-store.


I feel that this news is positive, as Saatchi X has proven
that they “get retail” from the consumer lens and have spent the past 8 years
proving it to Wal-Mart. A strong brand underneath the Publicis holding company,
this could be a powerful move that launches a much needed Agency services trend.


However, having nested within the walls of various retail
corporate headquarters, I question if legacy mid-level management will easily
pass the baton to one Agency team to lead every single Retail Media effort.
An “In-Store Agency” will need to effectively build bridges with Merchandising,
Marketing, Employee Communications, Interactive, IT, Store Planning and Operations
teams — no easy feat. If successful, however, the outcome could bring real
meaning to building customer-centric brand strategies.


Be it an agency or an appointed team lead, the concept
of building a central control point for all store communications just makes
sense. Like other change management, it’s simply going to take some trial, error
and strong leadership to get it right.

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17 Comments on "BrainTrust Query: Will Wal-Mart’s Appointment of an ‘In-Store Agency of Record’ Spark a New Trend?"


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Kenneth A. Grady
Guest
Kenneth A. Grady
14 years 6 months ago

At Wal-Mart’s level, Saatchi X’s task is beyond daunting. Coordinating all the fiefdoms involved in the branding effort will be time-consuming and may simply result in the least common denominator effect driving the retail media result.

However, this engagement helps highlight an issue that many of us have raised for years – fragmentation of the branding/customer experience. Until one person drives the branding experience from start to finish, the customer will be bombarded by choppy and disconnected pieces. The buyer drives the packaging, operations controls the in-store experience, marketing controls the advertising, HR controls the employee contact and so on.

I look forward to the day when some retailer decides that viewing the customer experience from beginning to end through one focal point is most important and aligns its resources accordingly. Saatchi X has a big piece, but a disconnected piece, and that will make it hard to integrate successfully with the other Wal-Mart customer experience pieces. Given the growing interest in retail media, it is probably the start of a trend.

Jan Mauldin
Guest
Jan Mauldin
14 years 6 months ago
I do love to hear the agency’s talk about themselves…..I am and have been in marketing, in retail, for over 25 years – 10 of them at Wal-Mart corporate offices. In fact, that’s where I learned about retail. And, by the way, I learned from Sam Walton. He would be getting a kick out of all this thinking, strategizing, anticipating, blah, blah, blah. He was a simple man, with a simple plan for a very simple business — buying and selling goods. He taught me two things: the store is the number one communications vehicle and, if you want to know how you are doing, ask the customer. I assure you, an outside agency will not understand ‘simplicity’ or the customer. They will have lots of ideas that won’t play out in a store environment – or they will repackage every idea they have ever had for every other RETAIL client. But I’m bettin’ not an original thought, idea or tactic will emerge. Agency’s don’t get retail. They say they do, but one after another… Read more »
James Tenser
Guest
14 years 6 months ago

“Retail stores are communication environments for brand messages.”

Absent of a well-thought-out organizing principle and coordination, the retail messaging environment may decay into what amounts to a chaotic assault on shoppers’ senses.

The appointment of Saatchi & Saatchi X by Wal-Mart may in part reflect this understanding. There’s much to be gained by delivering relevant, appropriate in-store messaging, but there’s also a risk of alienating or confusing shoppers.

Wal-Mart earns tens of millions from advertising on its in-store video network. It is rightly concerned that this income comes not at the expense of retail category performance but rather as a means of further boosting that performance.

Until recently, Wal-Mart’s partner in the network, Premier Retail Networks, San Francisco, has served as ad sales force, media distributor and creator of content. Now it appears as if that last role may be in part shifted to X.

Bill Bittner
Guest
Bill Bittner
14 years 6 months ago

For all the difficult reasons everyone mentions, this makes a lot of sense. No one who walks into a large retail store can help but be overwhelmed with all the “messages” being shot their way. It is precisely the lack of coordination that has made this cacophony impossible to decipher. The consumer’s reaction is to “turn it all off” and go about their intended shopping while ignoring the conflicting messages they are receiving.

This will be a difficult task and interesting to watch, but without it a retailer risks offending their most important asset… the consumer franchise.

Bernice Hurst
Guest
14 years 6 months ago

The very size and complexity of Wal-Mart’s needs may swing this towards success. As no other major retailer even comes close to their advantages/disadvantages, keeping things in-house would make far more sense than trying to follow this lead.

Michael L. Howatt
Guest
Michael L. Howatt
14 years 6 months ago

I guess all this discussion about marketing strategy and aligning with the manufacturer’s game plans has some merit, but the ultimate question will be does the typical Wal-Mart consumer really care? How much are they actually paying attention to promotion vs. just looking for low prices? That’s why they endure the long walks through the parking lot and massively overcrowded aisles and checkouts in the first place. Saatchi X can add glitz to the consumer experience if they want, but in reality it may not change a thing.

Art Sebastian
Guest
Art Sebastian
14 years 6 months ago

I think Wal-Mart has made a good decision to appoint an ‘in-store agency of record’ to handle some of its advertising functions. The key is the firm will be in-house, meaning they will integrate themselves into WM’s business as if they actually worked for WM directly. I see them bringing solutions and ideas that WM may have overlooked. I also see them bringing an unbiased approach as well as some industry best practices.

Good job WM – now they need to make sure they manage the relationship, strategy, and execution appropriately. At the end of the day, WM is accountable to the shareholder, not contractors.

Ben Ball
Guest
14 years 6 months ago

It will be interesting to see how this move evolves with regard to vendor access to in-store marketing vehicles. Will the category manager continue to be the primary interaction point for vendor involvement? Will the agency have control over which messages are “on point” for any given period — effectively taking on decision making for promotion scheduling? Will they have creative veto and become another checkpoint in the pipeline? Will they become the gatekeeper of (reseller of?) in-store media vehicles for Wal-Mart?

Bill Robinson
Guest
Bill Robinson
14 years 6 months ago

Wal-Mart is again taking the industry lead in the burgeoning field of in-store marketing. They’ll leverage their in-store TV network and in-store digital displays. And they’ll no doubt exploit their vendors who thirst to engage one-on-one with Wal-Mart’s customer.

But the key to effective promotion is and has always been customer feedback and merchandise insight. Will Wal-Mart’s vast business intelligence resources be able to capture and report the customer response to in-store promotions? Will it conduct market tests to measure the sales uplift as customers receive targeted offers and promotions? If so, will they have enough test samples to understand which customers segments are most/least receptive? Will they understand that an effective advertisement to one segment might turn off another?

Will the Saatchi & Saatchi team work close to the merchants? They’ll need to understand when to promote due to high margin buys and overstocks and tone down due to inventory shortages. In-store marketing is more than gadgets and glitz. It’s mastering customer feedback and embracing the merchant’s playbook.

renee hammes
Guest
renee hammes
14 years 6 months ago
I work for a retailer in the creative department. We’ve seen agency driven directions that were executed to win an award but fell short of any connection to our customer. We’ve also seen other agency work that is big on hype and short on quality. All of it has a failure to understand our customer. I’m not down on agencies but the ones we’ve used. We always end up bailing them out and fixing what was wrong or didn’t work. What I think is needed is someone with solid experience in branding and advertising that will lead internally that can explain what branding is to the other executives. Someone needs to be in place internally that recognizes true quality work from an agency and has their main loyalties to the retailer. It doesn’t take much to impress our executives when they are clueless about marketing and because they lack the experience, they’re happy to write off those responsibilities to someone else. I respect that Wal-Mart is recognizing it as being important but I agree that… Read more »
Craig Johnson
Guest
Craig Johnson
14 years 6 months ago

Congratulations Saatchi & Saatchi X. The AOR appointment is nothing short of a coup…just don’t kid yourselves to think it’s as altruistic as wanting to control the consumer’s experience. It’s about money…and getting more of it into Bentonville’s pocket as margins get tighter and same store sales max out.

The ripple effect I see coming is in the hallways of manufacturers, most of them overreacting to meet the new demands of their largest customer. Wal-Mart sales team leaders will suddenly become brand managers too…they’ve been defacto CEOs for years already. Believe it or not, how successful X is at W-M, depends as much on manufacturers transferring power to sales as Wal-Mart transferring power to Andy Murray’s team at X.

I hesitate to say that the “brand” is dead…but Wal-Mart’s willing to try anything to get at manufacturers’ almighty marketing dollar…they’ve already run trade spending dry and growth isn’t as simple as it was even five years ago.

Race Cowgill
Guest
Race Cowgill
14 years 6 months ago
As these comments and Laura’s excellent background have suggested, there are two levels to this challenge. One is the strategy, content, unification, and execution of the messages themselves. The other is the organizational forces that will determine how, if, and to what degree Saatchi will be able to do this work — also known as organizational politics. This is no different than every other project any ad/branding agency undertakes, but it will be far more pronounced here. Having for decades observed and analyzed the strategies agencies use for landing and managing their client projects, we have found that almost every single time it is the same: “sell” the client, as if they were just another “target” of another ad or branding message/campaign. This works poorly and explains the large turnover of agencies with clients. Building real consensus and not “selling” is not something ad agencies do well, either within themselves or with clients (note the large turnover in ad agency personnel, as well). This core weakness is likely to have a greater impact in Saatchi’s… Read more »
Herb Sorensen
Guest
14 years 6 months ago

Whether this works in practice or not, it’s a valuable idea to bring all of the shopper image/relations work into one focus. I have never thought retail stores were “managed” from the top – more like “influenced” from the top. The issue here will be whether Saatchi X really gets the shopping experience at both the quantitative and qualitative level, and how much influence they will be allowed to have “from the top.” But then, why would a retailer go outside to get this? It could be a good transitional step on the way to Wal-Mart “buying” Saatchi X thinking – if it works.

I’m assuming this is a top management experiment.

Stephan Kouzomis
Guest
Stephan Kouzomis
14 years 6 months ago

Magnificent, action step made by Wal-Mart!

The ex Pepsico and Target marketing executives, leading Wal-Mart’s new marketing and consumer-centric strategic and annual direction are beginning to make a very meaningful move.

Obviously, both individuals have the CEO and President on board. Now, the hard work starts with the important cultural environment and ‘mind set’ changes of key disciplines like merchandising, procurement, category managers, etc. who have little, if any, advertising, consumer centric, and engagement experience.

And do note, this new appointment for in-store level activities will need to tie-in with the overall consumer advertising campaign from another agency.

To be more pointed, Wal-Mart’s new assignment to Saatchi & Saatchi is not about shelf coupon offerings; TV screens with shortened, price driven communications; and / or specials on Wal-Mart’s own labeled products.

But, I’ll suggest that it is directed to a shopper message which leads to awareness, trial and repeat sales, within a context of Wal-Mart’s point of difference…not its often used price advantage. Hmmmmmmmmmmmmmmmmmm.

Mark Lilien
Guest
14 years 6 months ago

Because Saatchi & Saatchi X already had a significant relationship with Wal-Mart, it’s unlikely this change will be disruptive. Let’s see if Saatchi & Saatchi X, as in-house agency, will rationalize the in-store customer experience for Wal-Mart. Today’s Wal-Mart in-store media experience: a cacophony of unrelated competing messages. Saatchi & Saatchi X’s biggest challenge: achieving focus to improve the customer experience. The in-house agency will need huge authority to hit that target.

Rick Moss
Guest
14 years 6 months ago
Editor’s Note: Wal-Mart is distributing this clarification from Julie Roehm, SVP, Marketing Communications regarding their relationship with PRN: “I want to clarify one aspect of our recent announcement that Saatchi and Saatchi X has been appointed Wal-Mart’s Agency of Record (AOR) for Shopper, In-store and Associate communications. As our AOR in this arena, Saatchi will be responsible for a wide range of customer and associate touchpoints and communications vehicles. This work complements the on-going work of our in-store television network which is managed by Premier Retail Networks (PRN). Our relationship with PRN does not change as a result of the announcement of our partnership with Saatchi and Saatchi X. In fact, PRN and Saatchi and Saatchi X will complement each other with consistent in-store messaging and creative just as PRN has worked with our other advertising partners to create in-store TV messaging that is consistent with our external advertising. PRN remains a valuable and vital strategic partner of Wal-Mart and we look forward to working with them on continued innovations with our in-store TV network.”
Peter Breen
Guest
Peter Breen
14 years 6 months ago

Saatchi & Saatchi X is not a Madison Avenue advertising agency. It is an in-store marketing and merchandising specialist based in Arkansas. For eight years, the agency has been working with Wal-Mart and many of its product vendors (most notably Procter & Gamble) to develop programs that make the shopping experience easier, more productive and more entertaining. Saatchi’s work is exemplified by category redesigns and thematic campaigns that address shopper needs, not by signs trumpeting price promotions or ads on in-store media vehicles.

This appointment is another sign that Wal-Mart is dedicated to creating a shopper-friendly environment, something the chain has decidedly lacked as it conquered the world on price alone.

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