Coles is one of the biggest spending advertisers in Australia. Last year it spent in the region of $50 million, according to Nielsen. It's owned by Wesfarmers, which also owns Bunnings, Kmart, Target and Officeworks.
Locked in the duopoly battle with Woolworths, Coles has over the last eight years dug itself out a hole and turned itself around from a under-performing supermarket losing market share to quite the opposite.
There's been reports (broken by Mumbrella) that Wesfarmers is putting the majority of its media accounts across its businesses up for review – specifically Coles and Bunnings. If, as has been suggested, the entirety of Wesfarmers business were to review its media – it would be well over $220 million of business up in the air. That is a lot, to say the very least. It would affect countless agencies and would dominate the next six months at least.
But the fact is, there's a lot of doubt over whether this is the case at all. No one knows (or no one is saying anything concrete). The mail on this one is so conflicting that writing any kind of credible news story seems foolish. Hence, the AdNews story on 'Coles media up for pitch' has not been forthcoming. Rather than rush in making a bold claim we're sitting back and waiting for some facts.
A spokesperson from Coles corporate team told AdNews last week in rushed tones that they didn't even know if anything was happening at all - across Wesfarmers or at Coles, casting doubt on whether any RFIs were out there at all. Not the usual corporate affairs 'no'. Not even a 'no comment' or 'we don't comment on rumour and speculation' which all in some way really means 'yes'. There were no confirmations, no denials, just a lot of confusion.
Something is happening, but it's not clear what, and so it's not clear what the wider implications will be. It's almost certain the Coles business will come up for official review imminently, Although not if you ask Coles. Or incumbent agency UM. But as yet there's no brief. Bunnings is also highly likely. But as for the entire Wesfarmers group – that seems less likely.
The Coles media business has sat with UM for the last 12 years. Bunnings (and Officeworks) sits with Initiative and has done for around 15 years. If it does all end up in play IPG would be feeling the pressure of possibly having to fight for two major clients it has long-standing relationships with.
But while it would be quite a strain to be defending that much business at once, it's not a bad thing for Coles to be reviewing. Whether a client is happy with an agency partner, the work and their relationship, 12 years is a long time in media. Technology, demands and services have all moved on and evolved and it would be irresponsible for an advertiser not to be taking stock and seeing what's out there and if it is in fact getting the best quality work to reach its objectives.
What the concern would be for UM is how heavily procurement-led the review is. In the age-old battle between marketing and procurement a partnership that has been working well and effectively for years could be chewed up and spat out to squeeze out a few more dimes. That's lose-lose for everyone – including a new agency if one is appointed.
Sidestepping to take a look at Coles' arch nemesis Woolworths, it seems to be in the same dire straights that Coles was eight years ago. Coles pulled itself up by its bootstraps, got in a management team that really knew how to do good retail and turned itself around.
Now Woolies, after the exit of its CEO and a mass exodus of its top marketers last year shortly after it reviewed its media (retaining Carat after a long drawn-out pitch for the $240m business) and creative (appointing Leo Burnett), feels as though it is now somewhat languishing and needs to do the same. It wouldn't be hugely surprising if whoever comes in and steadies the ship there takes a fresh look at the agency arrangements all over again.
Whatever happens it's set to be a transformative year for two of Australia’s biggest brands and biggest spenders.