Think you've got what it takes to be Wal-Mart's new ad agency? Here's your homework assignment: In five weeks, cook up a $200 million brand campaign that uses TV and traditional media, the Web, and Wal-Mart's in-store environment to get people shopping the consumer electronics department, and another effort that gets parents and kids pumped up to shop Wal-Mart (WMT) for next years back-to-school shopping season. Meanwhile, make sure both get consumers to look at the retail giant's brand in a new and different light than before.
Those are the marching orders for the final four advertising agencies seeking a chunk of Wal-Mart's massive $570 million annual advertising budget, according to the company's "Agency Finalist Brief," which was obtained by BusinessWeek.com. A Wal-Mart spokesperson downplayed the significance of the brief, saying the assignment was largely hypothetical.
With 138 million customers shopping its stores each week already, Wal-Mart isn't necessarily interested in new advertising to lure in even more patrons. Instead, the retailer is looking to get its existing shoppers—many of whom frequent the store for a few key items such as low-margin hardware supplies and groceries—to "cross-shop" and move into the departments they rarely visit, filling their shopping carts higher than before.
"Driving traffic per se is not really Wal-Mart's core marketing challenge," said the brief, which was handed out to finalist agencies Draft FCB of Chicago (IPG); GSD&M of Austin, Tex. (OMC); The Martin Agency of Richmond, Va.; and Ogilvy & Mather (WPP) of New York at a meeting on Sept. 1. "The opportunity is to engage the customers who are in Wal-Mart stores to shop more categories," says the brief.
UP FOR REVIEW. The agency review is part of a fresh marketing initiative for the retailing giant, which has long relied on the power of low prices to draw customers into stores, rather than savvy marketing. But as other big-box retailers such as Target (TGT) have won cachet with shoppers for offering cheap but stylish clothing and housewares, Wal-Mart has had trouble getting people to move beyond low-cost, low-margin items. So at the end of May, recently appointed Chief Marketing Officer John Fleming put the company's advertising account up for review, which had been in the hands of agencies Bernstein-Rein and Omnicom-owned GSD&M since 1987.
The agencies will present their final pitches in early October. The brief, drafted by search consultancy Select Resources International, identified five "key categories of focus" for Wal-Mart's business: food, apparel, pharmacy, consumer electronics, and home furnishings. Prioritizing those categories in particular makes sense for Wal-Mart, says Kurt Barnard of Barnard Retail Consulting Group. All are price-sensitive, and "you have to be able to drive very shrewd bargains with your vendor in all of these categories, particularly furnishings and electronics to edge prices lower than competitors," according to Barnard. That's something Wal-Mart is expert at.
Meanwhile, the fact that apparel and home furnishings have higher-than-average margins—and that consumers often make big-ticket purchases in the electronics department on items like flat-screen TVs and surround sound—make those categories even more appealing.
DOWN TO THE WIRE. The assignment comes out during the final phase of Wal-Mart's agency review process. During the week of Sept. 18, members of the Wal-Mart review team will visit each agency for a five-hour "shirt-sleeves work session" where agencies can brief Wal-Mart execs on their preliminary plans and solicit the Wal-Mart group for feedback and advice, according to the brief. Then, in an offsite meeting Oct. 9-10 in Bentonville, Ark., each agency will give a two-and-a-half-hour presentation, providing an overview of its strategy for Wal-Mart's new brand position as well as specific plans for the assignment. Wal-Mart is expected to make its decision shortly afterward.
GSD&M and Draft FCB both confirmed they were involved in the final round of the Wal-Mart review, while neither The Martin Agency nor Ogilvy & Mather would confirm or deny they were finalists. When asked about the brief, all four agencies declined to comment and directed questions to Wal-Mart and Select Resources International. But while it's keeping mum for now, the agency that wins will have to make big noise to shift shopper habits at America's largest retailer.