Essay 1439

The following story appeared at AdAge.com. A MultiCultClassics perspective immediately follows…

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Grupo Gallegos Drops Out of Wal-Mart Hispanic Review

Agency Search Stalled Following Dismissal of Julie Roehm

By Alice Z. Cuneo

SAN FRANCISCO -- In the latest twist on Wal-Mart’s agency search saga, Grupo Gallegos, Long Beach, Calif., has dropped out of the retailer’s Hispanic review.

Terse statement
Grupo Gallegos today issued a terse statement saying it would no longer participate in the review for the Hispanic account, expected to be worth more than $55 million. Wal-Mart’s Hispanic agency of record since 1995, independent Lopez Negrete, Houston, is a finalist in the review. Other contenders for the account include LatinWorks, Austin, Texas, and Miami-based Accentmarketing, which [is] 49% owned by Interpublic Group of Cos.

Final presentations were made Nov. 17. But a decision has been postponed following the dismissal last week of Julie Roehm, Wal-Mart’s senior VP-marketing communications who was handling the review process. The agency she selected for the retailer’s $580 million general-market account, DraftFCB, was subsequently fired.

Broader review
In addition to the Hispanic contenders, there are three African-American and three Asian-American agencies pitching for other facets of Wal-Mart’s multicultural account. African-American incumbent E. Morris Communications, Chicago, is competing against GlobalHue, and True, New York. The Asian-American incumbent is IW Group, Los Angeles, 49% owned by Interpublic. The other two Asian-American contenders are New York-based Admerasia’s New A and Pancom, Los Angeles.

Wal-Mart has been working with search consultant Select Resources International, Santa Monica, Calif., in both the general market and the multicultural reviews.

Executives from Select Resources as well as Wal-Mart and Grupo Gallegos executives did not return calls and e-mails by deadline.

Mya Frazier contributed to this report.

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Lost in all the scandalous hoopla surrounding the ejections of Julie Roehm, her lackey Sean Womack and DraftFCB, the competing multicultural agencies must now chill out until Wal-Mart chooses its new White agency. The second pitch is scheduled for late January.

On Thursday, incumbent White agency GSD&M made headlines by dropping out of contention. Co-founder and President Roy Spence proclaimed, “I want to thank Wal-Mart for inviting us to re-pitch the business. I have decided to decline. We helped build Wal-Mart from $11 billion in sales to $312 billion. We declare victory. We will do everything to make the transition perfect. We wish our great friends well. And we are moving on.”

Of course, there was considerably less attention given to Grupo Gallegos, who officially withdrew from the Hispanic review two days earlier.

Grupo Gallegos — featured in previous MultiCultClassics essays — is one of the hottest shops in the industry. Their presence in the competition is like having Weiden + Kennedy or Crispin Porter + Bogusky join the shootout. The agency consistently wins major awards, including Cannes Lions. DraftFCB wouldn’t know Lions if two were fornicating on… oh, never mind.

The Hispanic portion of the Wal-Mart account is estimated at over $55 million. That’s nowhere close to the reported $580 million to be handed to a White agency, despite the fact that Hispanics make up a huge and growing segment of Wal-Mart’s customers.

The Black agencies are even more invisible than the Hispanic counterparts. Sources indicate the victorious Black shop will get a smaller sack of loot too — about $30 million. E. Morris Communications in Chicago has serviced Wal-Mart for over 13 years, producing award-winning work. Rumors say EMC’s remaining clients have drastically slashed budgets, so a Wal-Mart loss would be devastating. Roehm’s ouster may be a blessing in disguise for EMC, as she had strong ties to opponent GlobalHue, who handles multicultural assignments for Chrysler (Roehm’s former employer).

Online commentators like George Parker recommended that Wal-Mart retain incumbents GSD&M and Bernstein-Rein. EMC deserves to keep its meager slice of the pie as well. The shop survived Roehm’s chaotic stint, coping with the alleged change agent’s quirks and disruptions. As Roehm enjoyed free sushi from Howard Draft — plus oversaw the creation of risqué ads that Wal-Mart honchos ultimately dumped — EMC quietly produced a solid holiday campaign that the advertiser has been running in general market rotation.

Meanwhile, the Asian agencies are almost completely ignored. It’s unlikely anyone would take notice, even if Rosie O’Donnell announced the winner with more “ching-chong” racist ravings.

What makes it all particularly disgusting is that the multicultural shops made final presentations in November. And it doesn’t appear they will be asked to show additional ideas. In other words, the minorities were told to wait in the back while the White folks sort out the important decisions.