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News Analysis 9 Mar 2022 - 3 min read

Coles channels Ford and McDonald’s as retailer launches $100m-plus bid for full service model; Publicis, WPP, Omnicom in hunt; CX, martech and production in play

By Paul McIntyre & Brendan Coyne
Sam McLeod Coles

Samantha McLeod: “[The integrated model] is quite prevalent in the UK and the US. Big, global brands tend to go down a similar path to this.”

Coles’ new brand and digital chief has fired the starting pistol on a $100m-plus holdco scramble to prove who has the ultimate integrated model across just about every key marketing-CX-media discipline as it bids to catch Woolworths. Where and when it ends is anyone’s guess, including theirs, but consolidation at the top end of town now appears a confirmed trend.

Customer experience is all consuming and we would never get good customer centric results if there were lots of different silos working on that. So we definitely want to bring that together.

Samantha McLeod, GM, Brand, Digital & Design, Coles

Coles has confirmed it is going to market for a full service bespoke agency across creative, media and digital – and looks set to include broader services such as digital production, martech and CX. The move is seen as a major roll of the dice for a retailer now playing second fiddle to archrival Woolworths. CMO Lisa Ronson is determined to catch up, and has tasked new recruit Samantha McLeod with overseeing the agency overhaul.

General Manager for Brand Design and Digital, McLeod, was brought in last year to revamp brand and digital marketing strategy. Six months into the role, McLeod said she has been “having a look at things with fresh eyes, being objective,” and is intent on bringing everything together.

Coles’ main agencies – Big Red, DDB and OMD – have already been working collaboratively “organically across some of the business already – and when people are working well together it yields good results,” McLeod told Mi3.

“So we just want to formalise that at a group level [rather than] try to retrospectively fit different things [together]. Then, as our business grows and evolves, hopefully that group can grow and evolve with us.”

McLeod, a former business lead with tier one London creative hot shops BBH and Mother and a key player in the UK’s largest retailer Tesco’s creative strategy, cited “highly successful” integrated, bespoke global models for Ford delivered by WPP and for McDonald’s by Omnicom as the templates Coles aims to emulate.

“[The integrated model] is quite prevalent in the UK and the US. Big, global brands tend to go down a similar path to this.”

As an agency exec, she said, “I had great success with [that approach] personally”, albeit via “less formalised” arrangements that enabled her to “grow and evolve the different capabilities of the agency to service a wider remit for the business rather than just doing the ads.”

Asked if winning group will be required to manage martech and CX, McLeod replied, “they absolutely do”.

“Customer experience is all consuming and we would never get good customer centric results if there were lots of different silos working on that. So we definitely want to bring that together.”

Down down

The RFP will lead to a scramble of seismic proportion amongst Australia’s major agency holding groups, which will throw the kitchen sink at an account likely worth north of $100m in media billings alone.

Coles declined to confirm those numbers but industry estimates suggest its broader marketing spend could be double. For the winning agency group, annual direct revenues could be worth more than $20m over a contract that could run for five years.

The pitch means OMD’s new leaders Sian Witnall and Laura Nice face their first major test since Aimee Buchanan’s defection to GroupM. They don’t come much bigger.

UM held the account for 13 years prior to OMD landing the business in 2016 and IPG’s omission will raise strategic questions over its lack of owned creative services, given the apparent trend to consolidate agency arrangements at the very top end of town – though not always successfully.

Publicis has attracted Toyota, Westpac and Arnott’s housed within its ‘power of one’ structure locally, and most recently took both creative and media for Johnson & Johnson after its ‘Josephine’ integrated model via DDB and OMD ended earlier this year.

The long-term results, however, are yet to be assessed.

Production shift?

The pitch, two weeks after Coles' first half results, follows its bid to catch Woolworths’ lead in retailer media, last week hiring Nine and former MediaCom and Carat exec Paul Brooks to run its media operation.

If Coles is to successfully create and execute campaigns for its supplier brands it will likely require significant digital production expertise.

The RFP announcement makes no mention of production, yet while it reads as curtain call to Big Red, the architects of Down Down and custodians of a 12-year relationship, McLeod indicated Ted Horton’s firm could still be involved.

“There is a world where you may still see them involved with Coles at a production level for sure,” she said. “That's something that we're going to work through in the process.”

However, both WPP with its Hogarth unit and Publicis with Prodigious will push their on and offshore capability and in-house, offsite or hybrid models hard.

How broad the ultimate scope and how long the review might take is anyone’s guess. As far as the pitch process is concerned, “We don’t have a firm deadline,” McLeod admitted.

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