UPDATE, 2.30pm: Coles has issued a response to today's story in AdNews: “We are not seeking to offer our suppliers the rates Coles has agreed with its media providers. We have no control over the rates agreed between suppliers and media providers which form part of contractual terms agreed between individual businesses. What we are doing is looking to introduce our suppliers to different agencies that Coles knows and works with to ensure that they are accessing the most competitive deals. Coles would not be involved in any commercial discussions that suppliers choose to have with media providers.”
EXCLUSIVE, 10.00am: Coles Supermarkets is facing dissent in the media industry with the release of a document that appears to offer its brand suppliers its own media advertising rates.
A Coles sourcing document obtained by AdNews, which the retailer has been circulating to some of its trading partners, lists supply chain areas where it offers its scale and access to deliver efficiencies. At the top of the list is media and advertising, followed by packaging, air freight, shipping and office supplies.
Coles could not be contacted at press time but media owners and media agencies were alarmed about the implications of Coles’ move.
If the supermarket chain was to offer suppliers its own media rates, it would create “an absurd precedent” which other major companies with large numbers of supply chain partners would seek to replicate. The result would be “media chaos”, according to one industry player who did not want to be named.
“I can understand it from a shipping or packaging viewpoint but in terms of media buying, I’m not sure the principle applies,” said Mindshare chief trading officer Sharb Farjami, who handles Unilever. “I’d love to know what the TV networks thought.”
The ARC 11 Sourcing Overview asks suppliers to “identify particular goods or services which are driving increasing costs in your business”. Under the media and advertising section, Coles asks suppliers to “provide details of your media requirements” which Coles then uses “to identify a competitive offer via Wesfarmers incumbent media providers”.
There remains confusion, though, around what Coles’ agenda is. Some suggested Coles would not offer its media rates to suppliers but rather it was about using its clout to get better tie-ups with media owners for Coles and its branded supplier partners. Coles’ media agency UM has been mooted as being part of the broader Coles plan. Mediabrands executive chairman Henry Tajer would not comment when approached yesterday.
Media owners said if Coles’ move was about helping suppliers develop integrated campaigns and was not about rates, it was less of an issue. However, they said it would shift the dogfight to media agencies, who could be threatened by the involvement of UM.
This article first appeared in the 23 March 2012 edition of AdNews. Click here to subscribe for more news, features and opinion.
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