Draft gets shaft

More on the ad agency gossip that has the industry a-flutter.

Wal-Mart Dismisses Ad Agency That It Had Just Hired - WSJ.com : Two days after removing two senior marketing executives, Wal-Mart Stores Inc. dismissed the lead advertising agency the executives had helped pick little more than a month ago.

The company dismissed Interpublic Group's Draft FCB and announced it was reopening the recently completed search for an agency for its $580 million account. The move is a new blow to New York-based Interpublic, which is trying to bounce back from an accounting scandal and major client defections.
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People familiar with the situation say that during the review, Ms. Roehm attended an expensive dinner at Nobu, a swank Manhattan eatery, that was thrown by Draft FCB for a group of new business consultants. The move may have violated Wal-Mart's strict corporate policy of not accepting gifts from vendors, those people say. Under the longtime policy, designed to keep suppliers from buying business at the world's largest retailer, Wal-Mart employees aren't allowed to accept even the smallest gratuities.
Ms. Roehm confirmed that at Draft's behest, she had spoken about the selection process to a group of consultants at Draft's New York office, and later attended an event at Nobu that Draft held for the same group. However, she said, her attendance wasn't a violation of Wal-Mart's policy. “As far as I know, there was not a dinner party . . . just hors d'oeuvres. We attended a short period of time and left.” She also said it was unclear to her why Wal-Mart dropped Draft.

The agency's dismissal “is a result of new information we have obtained over the past few weeks,” Mona Williams, a Wal-Mart spokeswoman, said. “Because of work done during the original selection process, this new review should move quickly,” she added. “We are open to including another Interpublic agency in the process. We expect the new agency to be on board by the end of January.”

Ms. Williams declined to discuss the “new information.” In response to questions about whether it involved perks inappropriately accepted by Ms. Roehm, she said: “Our policy is that our associates cannot accept anything from suppliers, not even a cup of coffee. I'm not saying if it's related to this or not.”

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Wal-Mart, which has struggled this year with weak same-store sales, hired Draft as part of an effort to trade its mass-market approach for customized appeals to suburbanites, ethnic groups and city dwellers. It had viewed Draft as best able to help it identify and reach such customers.

This year, its push to add more-fashionable merchandise hasn't lured upscale suburbanites, and it may have alienated Wal-Mart's traditional price-conscious shoppers. The retailer revived its price-rollback campaign this fall as sales at stores open at least a year fell below expectations. Wal-Mart had put the campaign on ice earlier this year in favor of ads marketing its higher-margin fashions, home decor and electronics products.

“We're very disappointed by Wal-Mart's decision,” said a spokesman for Draft, which referred questions to Wal-Mart.

Some agency executives said they were stunned by the move and unsure whether Wal-Mart intends to reconsider only the three finalists beyond Draft or broadly reopen what had been a five-month search. The dismissal of Draft will have no immediate impact on Wal-Mart's current advertising. The contract was to begin early next year.

The other finalists include Omnicom Group's GSD&M, Austin, Texas; Interpublic's Martin Agency, Richmond, Va.; and WPP Group's Ogilvy & Mather, New York. Aegis Group's Carat was named media buyer at the conclusion of the review. Carat has been invited to reapply for the business, and a spokeswoman for the firm said it will participate in the new review.

People familiar with the situation said that Wal-Mart and Draft had never formally signed a contract, although the hiring was disclosed in late October.

I really think the problem with Ms. Roehm and Wal-Mart had a little to do with gender issues, power, and the ole Red State Blue State divide. Especially since, per AdRants, she was having 'a relationship' with Sean Womack (vice president of marketing communications). Tisn't life grand?

from the NYT

...At the heart of the controversy, everyone agreed, is a culture clash. Ms. Roehm, a 35-year-old rising star who won acclaim in advertising circles for her work in the automobile industry, was never at home within the painstakingly modest by-the-books culture of Wal-Mart.

While some of the details are in dispute, several people briefed on the matter said that Wal-Mart dismissed Ms. Roehm and a lower-ranking marketing colleague, Sean Womack, after deciding that the pair had a personal relationship that violated the company’s strict ethics policy, which forbids fraternizing with subordinates.

After an internal investigation, these people said, the company also concluded that Ms. Roehm had accepted gifts, including meals, from companies vying to become Wal-Mart’s advertising agency, a coveted account because the company spends nearly $1 billion a year on marketing.

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Several weeks ago, Ms. Roehm courted controversy again when she oversaw production of a holiday TV ad, known inside the company as “Sexy,” that portrayed a husband and wife discussing racy lingerie in front of their extended family. The ad drew customer complaints and was immediately taken off the air, a person involved in the matter said.

But the biggest questions about Ms. Roehm’s conduct surrounded her work on a closely watched hunt for a new advertising agency for Wal-Mart. Over the last seven months, Ms. Roehm, Mr. Womack and three other colleagues crisscrossed the country interviewing candidates. During that time, her conduct surprised and, in some cases, alarmed Wal-Mart executives.

She was spotted taking a ride in an Aston Martin owned by the chief executive of one agency, Draft FCB. At another time, she was seen riding in a BMW convertible with the president of another, GSD&M, according to people familiar with the matter.

And she attended a September dinner given by Draft FCB at the Manhattan hot spot Nobu, during which she lavishly praised the ad agency and appeared to suggest it had the upper hand in the contest more than a month before an official announcement of the winner was due.

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Wal-Mart’s tough standards for employee conduct have become even more stringent since its former vice chairman, Thomas M. Coughlin, pleaded guilty in February to stealing thousands of dollars from the company using fraudulent expense documents and gift cards.

After learning of incidents like the evening at Nobu, and the suspected relationship, Wal-Mart fired Ms. Roehm and Mr. Womack around noon on Monday in terse meetings at the company’s headquarters in Bentonville, Ark.

Draft FCB was in the early stages of hiring as many as 200 additional employees at its Chicago headquarters to handle the Wal-Mart account.

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