March 26, 2004
the wal-mart effect
The Wal-Mart Effect
So you’re watching a dumb TV show. Suddenly a commercial pops up for Colgate toothpaste. You’ve been using Crest for years, there’s no way you’re switching to Colgate, so why is Colgate wasting your time?
Well, what you have to remember is that Colgate isn’t just using that commercial to sell to you. Colgate is also using that commercial to sell to Wal-Mart.
With certain low-value brands, unless you’re selling at Wal-Mart, you’re not really in business. You’re certainly not a player. So when the Wal-Mart guy asks the Colgate guy, “why should we put your toothpaste on our shelves”, the Colgate guy comes back with “well, we just launched a $40 million advertising campaign”. The Wal-Mart guy is impressed (especially as the competition is only spending $35 million this year), and agrees to display 250 million tubes of Colgate.
The bread and butter of advertising is not Apple Computers or Mercedes Benz. Most of the profit made in the big agencies is for low-value items like Colgate Toothpaste or Coast Deodorant Soap. And most of these brands have, repeat have to have Wal-Mart on board in order to stay market leaders, because the "Big W" accounts for between 10 and 40 per cent of their business. You want to lose your job as a senior brand manager for Unilever? Then walk in to your boss’ office and tell him Wal-Mart is no longer going to be carrying your brand. BOOM! You’ll be cleaning out your desk in 5 minutes.
So the next time you're presenting a storyboard to the Colgate client, just remember he's not thinking about you. He's thinking about that big meeting with Wal-Mart in 2 months when he has to show them the new commercial. The meeting his job utterly depends on. We agency folk are just bit players in comparison.
Anybody who wants to work in a big agency should read every single word written about Wal-Mart he can get his hands on. Otherwise he’s a fool.