Why the Walmart/Publicis union is a sign of things to come for client and agency
Walmart has made Publicis its go to place for all things marketing, an interesting if not spectacular move that could give the former the flexibility it craves and the latter the structure to get better margins from their services.
Walmart
The tie-up effectively means the advertising holding group will become the retailer’s agency of record, giving it unfettered access to a myriad of tools and talent. A new division launched at the turn of the month to manage this flow of marketing services for Walmart, while also offering a broader skillset including corporate reputation and technology that builds relationships with customers.
Interestingly, media isn’t included within the account. In fact, Publicis was sacked by Walmart earlier this year for a strategic review which is still ongoing. It’s thought that underpinning the decision is Walmart’s increasing propensity to handle media-buying in-house – mainly digital – as it builds out with WMX (Walmart Exchange) capabilities.
Nonetheless, the scope of the business Publicis has taken on is emblematic of the complexity of modern marketing and the need for better integration, not to mention the vital need for Walmart to have one creative partner in place that can react to it's changing media plans.
It echoes a wider feeling from senior marketers, especially those in the FMCG space, that they are fed up of having to be vendor managers of sprawling rosters. McDonald’s is one such advertiser, with it reportedly wanting something similar to Walmart for its sprawling US creative account.
The simple fact for these two titans of the industry is that managing several creative shops is an exhausting and expensive task, one that’s been exacerbated by a lethargy from both brand and agency to adopt processes that can pull them away from such dated models – until now.
Publicis has made a good start on being service lead with its ‘Power of One’ strategy that has seen it reorganise its brands into four hubs – creative, media, technology and healthcare. Tom Denford, chief strategy officer at ID Comms, believes it’s an approach that’s been missing from agency holding groups for some time. Agencies, in a search for margin, have built a vast menu of marketing services but perhaps not had the structure or service ethic to actually mobilise all those resources appropriately for the client brief,” he continued.
“Agencies should rightly adapt to client needs. We are seeing this in content and creativity and media will be next. Agencies resistant to being flexible and bespoke will fail. Those who can get their organisation structured to adapt to different client needs will succeed….I hope that these deals also contain some performance related income to align all agency resources to successful delivery of client outcomes. The proof will be in client business success.”
Regardless, more advertisers are likely to insist the big groups organise around their needs.
At Publicis this has seen the business introduce a creative board that’s able to match the right creative from any of its agencies to the right brief, all the while avoiding any client conflict. Perhaps even more pertinent to a company like Walmart is the fact that shopper marketing is one of the top Publicis’ priorities under its restructure, driven primarily through the expansion of its Arc brand.
Alongside that, the business is also amassing a unified approach across its shopper agencies such as Saatchi X, Publics Shopper and The Creative, whereby all the members are understood to have access to insights, training and case studies via an online portal.
And the win couldn’t come at a better time for the holding company, whose grip on the market has been weakening since 2014 with organic growth the lowest among its competitors. Last year this was compounded by the loss of two major accounts, Procter & Gamble's US media buying as well the Coca-Cola account. As a result Bloomberg Intelligence predicted this week that Publicis’ second-quarter results are likely to “drag”.