Tesco — the second largest retailer in the world behind only Walmart — woke up AdLand with a jolt Thursday morning when it announced it was switching its estimated £110 million ($US167 million) advertising account from Wieden + Kennedy to BBH without a pitch.
The ailing supermarket said in a press release the appointment of BBH — and also Blue Rubicon as its new PR agency — is to work on the “turnaround of our reputation and brand.” That much was obvious: Tesco is still reeling from the accounting scandal that saw it overestimate its profit by £250 million ($US408 million) and resulted in the suspensions and dismissals of several members of staff; it is rapidly losing ground to rivals in terms of market share and brand reputation; and credit agencies are lining up to junk the supermarket. Earlier this month CEO Dave Lewis set out an aggressive turnaround plan, which includes major price cuts and the closure of several stores and planned developments, so it was only a matter of time before its advertising got a shakeup too.
We have spoken to the CEOs of the two ad agencies involved — Neil Munn of Publicis Groupe-owned BBH and Neil Christie of the independently-owned Wieden + Kennedy — to uncover what really went down in the build-up to the the biggest ad account appointment of the year to date and what to expect from Tesco’s marketing in 2015.
Dropping W+K came as “no surprise”
This was Wieden + Kennedy’s first TV ad for Tesco, a tactical spot with a “Thunderbirds” theme:
W+K’s Christie admitted to us that the writing had been on the wall for some time.
“It is no surprise the relationship is coming to an end. I don’t think anyone looking at that decision will be surprised,” he said.
Everyone senior in the Tesco marketing department who was involved in W+K’s 2012 appointment to the Tesco account — including then marketing boss Matt Atkinson — and the CEO at the time, Philip Clarke, has now left the business.
Current CEO Dave Lewis’ background is also in marketing, having built his career at Unilever where he was part of the team that came up with the multi-award-winning Dove “Real Beauty” campaign. Appointing BBH marks his first outward display that Tesco is prepared to undertake drastic measures to turnaround the brand as well as the core business. (He gained a nickname at Unilever of “Drastic Dave” for cutting thousands of jobs and product lines.)
The Lewis and Munn relationship
It was at Unilever that Lewis got to know BBH global CEO Munn. The agency has worked with a number of Unilever brands over the years, most notably male deodorant brand Axe.
When it came to deciding which agency was the best fit for Tesco, Lewis didn’t hand over responsibility to Tesco’s recently appointed top marketer, Robin Terrell. He phoned up Munn himself.
Munn told Business Insider he and Lewis began discussing the partnership just before Christmas. He said that Lewis decided “reasonably quickly” that his agenda in turning around Tesco’s reputation and communicating a more consistent brand message across the various different parts of its business was a good fit with BBH’s vision of evolving into an agency that doesn’t just do traditional advertising, but business strategy and technology consulting, too.
Since those early phone calls, Munn says he has met again with Dave and “one or two” of its leaders from the marketing and customer team to discuss the plans going forward.
A glimpse at BBH London’s recent work and client roster:
The new-look Tesco brand
Munn describes the brief Lewis has set out: “What Dave is looking for is a more coherent expression of the Tesco brand. Our job is to bring that coherence and clarity and to deliver that in a creative and connected way across all touch points — Extra, Express, online and beyond.”
Trying to pin Munn down on exactly what that means is difficult. It’s clear Tesco’s brand has been eroded by the rise and rise of German discounters Aldi and Lidl at the value end, and the likes of Waitrose and Marks & Spencer for upmarket shoppers. Tesco — along with Asda, Sainsbury’s and Morrisons, which all also marked sales dips over the important festive shopping period — is stuck somewhere in the middle without much by way of differentiation.
So does Lewis want to take Tesco further towards the high-end, or hit the discounters where it hurts? “It’s too early to say,” Munn says. “I would take my lead from the closely documented Tesco [turnaround] strategy: building a stronger balance sheet, rebuilding trust and transparency, [for clues as to which direction the Tesco brand will go.]”
Munn would not comment over the length of the Tesco deal, but it looks as though Lewis wanted to bring on an agency for the long-term, not just to produce a big bucks “we’ve changed” brand campaign.
“Our success has been built on evolving brand ideas for clients, that is why Dave is coming to us,” he adds. Essentially, BBH has built its reputation on consistently producing high quality creative again and again with major brands, not just overnight one hit wonders. That takes time that it appears Lewis, with all his marketing acumen, is prepared to allow BBH.
What about Waitrose?
Tesco is now seeing out its contract with W+K, and there are still ads in development that are set to be released, which are likely to play out along similar lines to previous campaigns, focusing on value and the Tesco Price Promise. Equally, BBH will also work out its contract with upmarket grocer Waitrose — an account it has had to relinquish owing to the obvious client conflict — over the next three months.
We had to ask: Will Wieden + Kennedy now be setting its sights on the Waitrose account this year? “No,” says Christie. Not until that Tesco contract has officially come to an end, anyway. New business will clearly be the focus for W+K this year as it looks to make up the £110 million shortfall that comes with losing Tesco.
And as BBH has taught us this time around: holding close relationships with the top brass at major brands pays dividends when it comes to winning accounts. As Tesco’s famous tagline goes: “Every little helps.”
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.