Woolworths looks at paying ‘compensation’ to agencies in $240m media pitch
Woolworths is understood to be looking at paying agencies involved in its prolonged pitch for its $240m media account compensation, fuelling speculation it is set to stay with Carat on a revised year-long deal.
The pitch, which remains unresolved, has now been through four stages with a final shortlist consisting of incumbent Carat against rival OMD and MediaCom, with independents Match Media and Bohemia thought to be on a secondary list of smaller support agencies.
Mumbrella understands the retailer is considering paying the agencies involved for the hundreds of man hours involved in the challenging process, which was meant to be resolved by Easter, following the appointment of former Coles executive Tony Phillips as its chief marketing officer in March when the pitch was already underway.
Phillips has responsibility for supermarket, which represents more than 50 per cent of the business.
The original pitch had been expected to conclude not long after Easter, but became protracted following the appointment of Phillips, with some agencies thought to have spent hundreds of thousands of dollars vying for media account, which is one of the largest in Australia.
Sources have told Mumbrella that while the amount of compensation was still undecided the retailer would take the unusual step of reimbursing agencies for part of the costs involved in the extended pitch.
Companies being unwilling to pay agencies for their time in pitches is a sore point across the industry, with agencies regularly spending tens of thousands of dollars to compete for accounts they do not win.
The pitch has also been the subject of intense media speculation with the retailer last month denying industry rumours that the terms of its media pitch would be changed from a three year contract to a one year contract.
The media agency review is still being run by Helen Lecopoulos who moved from McDonalds to Woolworths back in November.
At the time of posting Woolworths had not responded to requests for comment.
Nic Christensen
Haha if Woolies paid compensation to all their agencies for stuffing them around they’d be stone cold broke by now!
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Interesting. Not too many smart remarks – anonymous or otherwise – when Woolworths is reviewing media agencies.
Cat got your tongue?
Alan Robertson
Partner
Kinesis Media Pty Ltd
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Dear Every Client,
Put the effort into the relationship with your existing Agency. I’m sure if you just tell the truth, minor (and even major) changes will be made, the relationship will become more solid, you will get better work, and save yourself thousands of wasted man hours.
Or, is it easier to upset the lives of the many people directly related to your business, than have a tough discussion?
If the relationship truly is terminal, just pick a name out of a hat. Lead Agencies are a commodity, so too the specialist agencies that support them. What you get out is directly related to what you put in.
Bob, who is a rabbit.
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If a client compensates for pitching, does the client get to own the ideas? Strikes me as a cheap way of getting a wide range of options and then cherry picking.
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Seems like Woolies aren’t impressed by any of the entries and driving costs down. The race to the bottom is truly on dear friends!
What do you expect from run of the mill agencies dressed up as “innovative, cutting edge”? Bah!
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Another great example of procurement obsession…
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