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News 4 Apr 2022 - 3 min read

Supermarkets shopping: Grocery giants all in play with agency partners as Coles cuts WPP from review over WW work but Publicis, Omnicom clear over potential Aldi, IGA, 7-Eleven, Suncorp conflicts; Aldi reviews media – Accenture Interactive enters fray

By Brendan Coyne - Editor
Woolworths, Coles and Aldi: A lot of advertising, media and production business to play for?

Woolworths' move to broaden ties with Hogarth has ramifications for Coles' media pitch, though Aldi's own global review may yet influence what lands where.

Update: Accenture Interactive has entered the Coles pitch and WPP is out due to conflict. The latter may be eyeing a bigger Woolies play as production unit Hogarth gets deeper into the group. The promise of faster, cheaper output via an offshoring-inhousing model is winning over some of Australia's major retail, FMCG and telco brands and will factor as Publicis and Omnicom battle for Coles' business. While conflict has struck out WPP over Woolies, Publicis holding Aldi and IGA and Omnicom working with 7-Eleven and Suncorp appear in the clear because they can be parked in separate agency brands. WPP’s production arm Hogarth is a scaled, centralised unit that was too hot for Coles. 

What you need to know:

  • Update: Accenture Interactive has been brought into the Coles pitch. Coles confirmed the move this morning, which raises questions about how it would handle media if the aim is a consolidated play – Accenture Interactive does not currently have offline media capability although it is said to have been exploring options in the Australian market. Coles was unable to immediately answer this question after informing Mi3 the consultancy has been brought into the review.
  • Australia’s three largest supermarkets are shaking up agency arrangements as brands across categories grapple with runaway content requirements.
  • A bid to push deeper into Woolworths’ Group by centralised production unit Hogarth has struck WPP out of the Coles pitch for a consolidated bespoke agency across advertising, media, production and CX.
  • Coles concerned over Woolworths conflict, but appears at ease with potential conflict for Omnicom and Publicis, whose media agencies house brands including Suncorp (Coles Insurance) 7-Eleven (Coles Express), Aldi and IGA owner Metcash.
  • Holdcos will argue they can solve conflict with agency brands, an approach that does not yet work with a centralised production unit.
  • Woolworths not pitching broader media and creative locally, Aldi in play globally.

Checked out

WPP is out of the running for what will likely be the biggest pitch of the year. Mi3 understands the group was ruled out within days of the brief being announced last month due to conflict, which it had raised in an early meeting with the retailer.

The conflict in question is Woolworths and WPP's Hogarth. The firm already works with brands within the stable such as Big W and Dan Murphy's, but is now understood to have landed a group production deal for Coles’ main rival.

Despite the consolidated Coles account estimated to be worth some $20m in annual direct revenues to the winning group, and Coles stating that it punted WPP "after becoming aware of a future conflict", WPP appears to be making a bet on its production arm enabling strong returns – especially if its proves a strategic advantage in landing more of Woolworths' media and advertising business

The offshoring/in-housing digital production model is landing with marketers, almost universally struggling to keep pace with runaway demand for content and battling to find and retain staff to deliver what can be monotonous work. Local brands including Woolworths' Big W, Myer, Vodafone and Suncorp are next in line to follow Nestlé, Dyson and Rolex in offshoring content grunt work. Digital production will likely be a major factor in settling the Coles pitch, given the volumes required by the retailer. Strong rumours that Aldi is in play globally for media, confirmed by two agency bosses locally, means Australia's supermarkets are shaking up their agency supply chain.

Unexpected item

Omnicom is left defending the Coles account with Publicis seemingly the only threat – though questions are being raised about whether Coles is holding Publicis to the same standard as WPP, given the holdco also currently houses Aldi via Zenith plus IGA owner Metcash within Starcom. Omnicom also has potential for conflict. The group handles media for Suncorp via OMD and media and creative for 7-Eleven via PHD and CHEP, with those businesses respectively competing with Coles Insurance and Coles Express.

Coles appears to take a different view, naming the two alongside WPP as the three runners in its announcement of the RFP, which took much of industry, including the holdcos, by surprise.

Most holding companies have multiple conflicts in every category – hence creating agency brands to solve them. They have not yet created multiple production companies, but given the surging market requirement, anything is possible. As an aside, agency bosses point out that consulting groups are far less subject to conflict issues – and suggest some of the big four have employed somewhat dubious offshoring models to boot.

Given the importance of digital production capabilities in delivering the retailer’s business, some market speculation suggests Publicis’ Prodigious production unit may help tip the scales.

While Omnicom does not have a centralised production arm, others point to DDB’s strong relationship with Coles’ top marketers, and proven pedigree in handling major retail work for giants such as McDonald’s plus some retail work for Telstra, alongside broad group resource. 

Coles General Manager for Brand Design and Digital, Samantha McLeod, told Mi3 when outlining the review that she has not ruled out Ted Horton's Big Red from remaining involved in a production capacity, though indicated a consolidated arrangement with one agency group is the goal.

Management of martech and CX is also in scope.

Two for one?

Woolworths’ media account is handled by Dentsu, which retained the account in 2014 under then Carat CEO Simon Ryan.

In 2018 the network set up Woolworths@Dan, a bespoke media unit to house most of Woolworths’ brands under one roof.

Carat again retained the business in October 2020 under Sue Squillace. The term of that contract is not widely known, but market speculation suggests the business, worth upwards of $150m in billings across the group, could now be in WPP's sights given deepening ties with the retailer via Hogarth.

However, that is by no means a safe bet and the structure of Woolworths' broader advertising and media business is complex, with in-house agency WooliesX created in 2017 to house digital, ecommerce, loyalty, data and customer units under one banner, though its scope in terms what is handled internally and what is undertaken by partners can be fluid.

Woolworths’ creative is handled by M&C Saatchi, which won the account in 2016, after losing it to Droga5 four years earlier. M&C had previously held the business for a decade. The agency set up bespoke agency unit 'Greenhouse' to handle the Woolworths business. Greenhouse sits within the same Surry Hills building as WooliesX alongside Cartology.

Coles is now attempting to take on Cartology and reduce Woolworths' lead in selling owned media services to brands, last month hiring Paul Brooks from Nine to run its retailer media operation and Sam Hegg from Brooks' former employer, Dentsu.

A Coles spokesperson confirmed that WPP is out of the pitch:

“Coles is very much looking forward to the ongoing process of creating a new bespoke agency model to gain even greater synergies in the way its creative, media and strategic work is performed. Coles requested that WPP no longer participate in the RFP after becoming aware of a future conflict which would prevent the agency working on the account.”

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