In what appears to be an act of insanity, Target has split with Wieden + Kennedy, the ad agency that has served it for years with memorable ads that occasionally grated but were almost always effective.
Since 2009, when Wieden became Target’s lead shop, Target has added at least $4 billion in annual sales. It saw $47.5 billion in revenues for the first nine months of fiscal 2011, up $2 billion from the year before. In 2010, the company booked $67.4 billion in sales, up $2 billion from 2009.
It was a Wieden ad, featuring a couple lost in a neighbourhood filled with Christmas reindeer lawn ornaments, that was rated the most effective new ad on TV in the runup to the shopping season by research group Ace Metrix.
Why would Target walk away from a relationship that was clearly successful? Here are their official, uninformative, explanations.
In truth, it’s the oldest story in the book: The chief marketing officer at Target, Michael Francis, left to work at JC Penney in October. Whenever a client executive with whom the agency has the key relationship leaves, the agency often finds its tenure in jeopardy. It doesn’t matter how good the agency’s record is — and Wieden is one of the best agencies in the U.S. (it does Nike’s commercials) — the new executive at the client will want her own people.
In this case the incoming executive is vp/creative Liz Elert, formerly of The Gap and Victoria’s Secret. She’s just gambled that a new agency will be able to add more than $2 billion in extra sales to Target’s coffers every year.
That’s a big bet. Let’s hope she knows what she’s doing.
Wieden is now free to pursue other retail clients — and the CEO of JC Penney, Ron Johnson, is another former Target alum. He also used to work at Apple, and Apple will be launching stores inside Target this year. So don’t be surprised is Wieden shows up on JCP’s roster.
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