Wal-Mart’s mess in its $580m account review – NYT update

Thanks to a reader of this blog, I now have a chance to read the New York Times article “Wal-Mart Fires Marketing Star and Ad Agency” and would like to share my 2 cents here. Here are some excerpts and my comments, [K: emphasis mine]

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. [K: OK, this may be the smoking gun.]

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. [K: In view of Wal-Mart strict policy on meals and gifts, this is really bad.]

These people, who have direct knowledge of the situation, spoke on condition of anonymity because they were not authorized to talk publicly about the case.

In telephone interviews last night, Ms. Roehm and Mr. Womack denied that their relationship violated company policies or that they had done anything wrong in dealing with the ad agencies. […]

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. [K: Why didn’t those “alarmed” Wal-Mart execs do anything then?]

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. [K: What is the big f*ing deal of this car ride here? If I want to pay an agency $580m for their work, I want to get close to them. I want to see if they think “right”. I want to see if I can stand sitting in their car (OK, fancy car) with them. It tells a lot when a person is at ease with himself/herself. A great and fancy car doesn’t make an a**hole a charming man/woman. This car ride thing just ticked me the wrong way. It is great gossip but as an executive deciding a massive account, I want to use all tools available to assess an agency. And that includes me riding their fancy sports car and if they are stupid idiots behind their hot wheels, their idiocy will be carefully noted in my review. Of course, I don’t speak for Ms. Roehm and have no idea what she was thinking. But I am giving her the benefit of the doubt here.]

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. [K: OK, “lavishly praised” may be unfair to the others. And “upper hand” is not cool either.]

At the dinner, Ms. Roehm spoke about how Draft FCB, formed this year by the merger of the Draft and Foote Cone & Belding agencies, might be the model of the ad agency of the future, said one attendee, Linda Fidelman, president of Advice and Advisors in New York, a consulting company that helps marketers search for advertising agencies. [K: Great to see a name, (any name) being quoted — Linda Fidelman. Doesn’t look cool. Mind you, it depends on how it was said. And the thing of show favourites is not cool.]

One agency executive familiar with the situation, who spoke on the condition of anonymity because the company might become involved in the search for a new ad firm, said that Wal-Mart executives were “turning green” over the Nobu dinner because of the strict Wal-Mart rules that prohibit employees from accepting gifts of any kind — including drinks or meals — from a supplier or potential supplier. [K: OK, the rules are clear here.]

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. [K: Wow, these are great reasons for the strict rules. Oh man oh man.]

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. [K: Now, why did Ms. Roehm sent out that “statement” of hers again?]

Three days later, Wal-Mart decided the agency search process had been tainted by the pair’s behavior and should be reopened, according to people briefed on the matter. [K: Yeap, tainted indeed.]

But Ms. Roehm said the process of choosing new agencies “was fair and exhaustive; we showed no favoritism.” [K: Just so many bad calls.]
Mr. Womack called the process “extraordinarily thorough and fair,” and said he had never had “an improper relationship” with Ms. Roehm. “We are friends.” [K: What can I say?]

The two were among 10 Wal-Mart executives who overwhelmingly voted to use Draft FCB, people involved in the process said. [K: What were the other 8 executives doing? A good portion of them OKed the deal too I suppose. So it is really the meals thing. And the “gifts” thing.]

Wal-Mart’s announcement was a crushing blow to Draft FCB, part of the Interpublic Group of Companies, whose stock fell 6.4 percent, or 79 cents a share, to $11.54. [K: Wow, that sucks.]

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. Philippe Krakowsky, an executive vice president at Interpublic, said, “We were disappointed to hear of Wal-Mart’s decision.” [K: Oh, a sad ending.]

So these are my initial impressions of this Wal-Mart mess.

4 Responses to Wal-Mart’s mess in its $580m account review – NYT update

  1. I Heart IPG says:

    What’s also sad here is that I’m not sure DraftFCB actually did anything wrong. I mean, if a prospective client allows herself to be courted, I don’t know what agency wouldn’t take advantage of that. As you point out, the other 8 people on the selection committee also voted for the DraftFCB work, and let’s consider that they weren’t on the take.

    Moreover, it’s hard to believe that GSD&M and Ogilvy also didn’t court Julie personally, since she seemed so receptive, but they get to pitch again if they want. Since Draft FCB isn’t being allowed to participate in the re-pitch, I have to figure that there’s something not being revealed here – like some egregiously large piece of graft from DraftFCB to Julie.

    Just awful.

    ***************

    Hi reader,

    If that alleged inappropriate gift thing has ground, then DraftFCB is on the hook still. But about those meals, I think the responsibility is probably Ms. Roehm’s as Wal-Mart is the one that has a very strict guidelines due to the crime by its former Vice-Chairman.

    I can see your logic on what GSD&M and Ogilvy probably may have also courted Ms. Roehm but to what extend, we don’t know. I suppose their claim to “innocence” was that they didn’t win the $580m bid.

    From the looks of it, whatever wrong doing there may or may not be, Wal-Mart won’t make much official noise. After all, they have enough publicity to deal with on this mess. And they are suppose to be conservative.

    You are right, it is just awful that things have to end this way.

    Kempton

  2. G. Willikers says:

    Our 35 year old Julie Roehm only got out of grad school 11 years ago – in 1995. Pretty amazing she was marketing director of Dodge just five years later. Is she really that good?

    The NY Times talked about how the musical she staged at Wal-Mart elicited groans from the company’s executives.

    But wait – at her graduate school’s alumni site, a much rosier picture is painted:

    “Julie Roehm, ’95, knows firsthand of one way to spice up an annual meeting—with a little song and dance. The Wal-Mart senior vice president for marketing communications staged an original musical comedy at the shareholders meeting June 2 in Fayetteville, Arkansas, that was featured in The New York Times June 3. Two dozen New York actors performed such numbers “Walk Across the Aisle,” “It’s All About the Customer,” and “The Day That I Met Sam,” about Wal-Mart founder Sam Walton. The musical was a hit. “I always knew this was a bit of a risk,” Roehm told the paper. “But everybody was willing to give it a try and that is all you can ask.” She said the company’s openness to the performance revealed “they are serious when they said ‘we are interested in marketing and open to your ideas.’” Roehm, a former senior marketing executive at the Chrysler Group unit of DaimlerChrysler, joined Wal-Mart in January”.

    http://chicagogsb.edu/alumni/news/archive/archive-ac-july-06.aspx

    Gee whiz, you don’t suppose SHE fed that to the school do you? Geez, do you think she might be in to self-promotion?

    Seriously, do you think there is one waking moment when Julie Roehm is not into self promotion?

    Wake up America. When are we going to ENOUGH to all the BS artists who get where they’re going on our backs at our expense.

    Yup, there was a culture clash alright. On one hand you have Wal-Mart, one of the most sophisticated retailers on the planet. You might have issues with them, but they are all substance and very little style. Ms. Roehm was brought in to better market the company and eventually the folks of substance came to realize there was noting but style. Sizzle but no steak doesn’t cut it in Bentonville. Maybe Ms. Roehm thought she was dealing with a bunch of hicks. But the reality is you eventually get found out in a small town.

    **************

    Dear G. Willikers,

    Thanks a lot for the Chicago Graduate School of Business reference. I love solid reference that adds some further insights to Ms. Roehm and Wal-Mart. I really appreciate your help here.

    It is so sad to see the following turned to the mess we have now:
    “I always knew this was a bit of a risk,” Roehm told the paper. “But everybody was willing to give it a try and that is all you can ask.” She said the company’s openness to the performance revealed “they are serious when they said ‘we are interested in marketing and open to your ideas.’”

    Now as to your other views, I beg to have some major difference on some of your views expressed here. And I will start a new posting temporarily entitle “Ms. Roehm’s cultural clash with Wal-Mart – Lessons learned

    Cheers,
    Kempton

    *************

    —- Dec 10 Update —-:

    Dear G. Willikers,

    After doing more researches and reading more, I think Ms. Roehm is probably “that good” based on what I read (see my posting). OK, she may be quite a good self-promoter but if I were in her-shoes, I might also be guilty of doing the same self promotion thing. (smile)

    I agree with you 100% that Wal-Mart is the most sophisticated retailers on the planet today. But at the same time, Wal-Mart is just too conservative to try what Ms. Roehm think is the right direction. Only time will tell if Wal-Mart is on the right track.

    I think Wal-Mart’s Achilles’ heel may be its desire to please and pander to absolutely everyone down to “a handful of consumers“. And, for that desire and wish, I submit that it will also make its ideas and offerings very bland. After all, in the extreme myopia and narrow-minded views of **some Americans**, I am sure “a handful of consumers” can be irritated quite easily and readily.

    Just my 2 cents from an industry outsider looking into the advertising world.

    Cheers,
    Kempton

  3. […] I really appreciate the comments left by a reader that added some information from Ms. Roehm’s alma mater Chicago Graduate School of Business’ Alumni Connections. At the same time, I have some major difference with the reader’s views that I will talk about in this post. Here is the part in Chicago GSB Magazine about Ms. Roehm, [K: emphasis mine] Julie Roehm, ’95, knows firsthand of one way to spice up an annual meeting—with a little song and dance. The Wal-Mart senior vice president for marketing communications staged an original musical comedy at the shareholders meeting June 2 in Fayetteville, Arkansas, that was featured in The New York Times June 3. Two dozen New York actors performed such numbers “Walk Across the Aisle,” “It’s All About the Customer,” and “The Day That I Met Sam,” about Wal-Mart founder Sam Walton. The musical was a hit. “I always knew this was a bit of a risk,” Roehm told the paper. “But everybody was willing to give it a try and that is all you can ask.” She said the company’s openness to the performance revealed “they are serious when they said ‘we are interested in marketing and open to your ideas.’” Roehm, a former senior marketing executive at the Chrysler Group unit of DaimlerChrysler, joined Wal-Mart in January. [K: I love the way Ms. Roehm took the risk here. I will add more on this]. […]

  4. […] first heard of NOBU in the Wal-Mart scandal. And now, I just read a review of the Hong Kong branch of NOBU by the trusted Hong […]

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