Wal-Mart Stores, Inc. has hit Publicis Groupe below the belt with the cancellation of its partnership with MediaVest, its media shop subsidiary. The account was valued at $900m, based on data compiled by Kantar Media regarding the amount that Wal-Mart spent on marketing campaigns in the U.S. in 2014.
Wal-Mart also spent $401.5m in its media campaign in the first nine months of 2015, the data showed.
Wal-Mart appointed MediaVest as its partner media shop about nine years ago after a rigorous competitive review process.
“We have made the decision to end our relationship with MediaVest. We thank them for their partnership over the past nine years,” said a Wal-Mart representative. “We are taking a different direction and looking for new ways to use media to connect with our customers.”
Move Follows Recent High-Profile Losses
The latest setback will no doubt affect MediaVest’s bottom line, after the recent loss of major lucrative contracts such as The Coca-Cola Co , which was valued at $500m; and Procter & Gamble Co account that was worth $2.6bn.
The loss of the P&G account saw Laura Desmond moved from being the global chief executive of Starcom MediaVest Group to become its Chief Client Officer.
The Bentonville, Arkansas-based Wal-Mart is yet to decide on its next move after its decision to cancel its deal with MediaVest; instead, it stated that MediaVest will assist it with the transition.
“We’re proud of the talent dedicated to this business and the award-winning, results-driven innovation we delivered for Wal-Mart over the years,” MediaVest said in a statement. “We continue to partner with Wal-Mart as they transition to their new model and wish them the best in their future direction.”
While it isn’t clear how long the transition will take, it is widely estimated to take at least a couple of months owing to the scale, complexity and size of the account.
Predictably, as it happens with executive changes, Wal-Mart’s decision to change its marketing agency follows the appointment of a new Chief Marketing Officer Tony Rogers, previously the CMO of Wal-Mart China, after the retirement of Stephen Quinn early this year.
The giant retailer had also appointed former long-serving Target global marketing chief Michael Francis as its strategic media and marketing advisor.
Wal-Mart Plans to Shift Some Roles In-house
However, speculation is rife that Wal-Mart plans to introduce a raft of strategic shifts in its marketing program, with the view of establishing major roles and components in-house. This fact is however subject to confirmation.
Moreover, no word is out yet whether the company plans to hire any new agency without conducting a review or whether it will kick off a review.
MediaVest had staffed 95 people to oversee its Wal-Mart account, with most of them primarily operating out of New York; while two were in Chicago, one in North Carolina and one in California.
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