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Wal-Mart Fires Marketing Star and Ad Agency
Julie Roehm denies having an improper relationship at Wal-Mart.
By MICHAEL BARBARO and STUART ELLIOTT
It was a coup for Wal-Mart: hiring away a top marketing executive whose envelope-pushing advertising campaigns — like a lingerie-filled mock football game — generated big business and big buzz.
But a year later, that executive, Julie Roehm, is out of a top job at Wal-Mart amid allegations, which she denies, that she accepted gifts from ad agencies, maintained a personal relationship with a subordinate and showed favoritism toward potential vendors.
Yesterday, in a surprising rebuke, Wal-Mart overturned Ms. Roehm’s choice to replace the company’s longtime advertising agencies — a decision that puts $580 million worth of marketing up for grabs again, two months after the original search process ended.
Her departure has roiled Madison Avenue and sent several major agencies scrambling to dust off their marketing plans for the nation’s largest retailer.
At the heart of the controversy, everyone agreed, is a culture clash. Ms. Roehm, a 35-year-old rising star who won acclaim in advertising circles for her work in the automobile industry, was never at home within the painstakingly modest by-the-books culture of Wal-Mart.
While some of the details are in dispute, several people briefed on the matter said that Wal-Mart dismissed Ms. Roehm and a lower-ranking marketing colleague, Sean Womack, after deciding that the pair had a personal relationship that violated the company’s strict ethics policy, which forbids fraternizing with subordinates.
After an internal investigation, these people said, the company also concluded that Ms. Roehm had accepted gifts, including meals, from companies vying to become Wal-Mart’s advertising agency, a coveted account because the company spends nearly $1 billion a year on marketing.
These people, who have direct knowledge of the situation, spoke on condition of anonymity because they were not authorized to talk publicly about the case.
In telephone interviews last night, Ms. Roehm and Mr. Womack denied that their relationship violated company policies or that they had done anything wrong in dealing with the ad agencies.
Ms. Roehm acknowledged that her style and ideas did raise eyebrows at Wal-Mart. “I think part of my persona is that I am an envelope pusher,” she said last night. “The idea of change in general can be uncomfortable for many people, and my persona as an agent of change can prompt that feeling.”
In one of her first assignments at the retailer, Ms. Roehm transformed Wal-Mart’s traditionally stodgy shareholder meeting into a three-hour Broadway extravaganza, hiring a troupe of New York actors who sang songs like “The Day That I Met Sam,” the company’s revered founder.
The show elicited groans from longtime company executives.
Several weeks ago, Ms. Roehm courted controversy again when she oversaw production of a holiday TV ad, known inside the company as “Sexy,” that portrayed a husband and wife discussing racy lingerie in front of their extended family. The ad drew customer complaints and was immediately taken off the air, a person involved in the matter said.
But the biggest questions about Ms. Roehm’s conduct surrounded her work on a closely watched hunt for a new advertising agency for Wal-Mart. Over the last seven months, Ms. Roehm, Mr. Womack and three other colleagues crisscrossed the country interviewing candidates. During that time, her conduct surprised and, in some cases, alarmed Wal-Mart executives.
She was spotted taking a ride in an Aston Martin owned by the chief executive of one agency, Draft FCB. At another time, she was seen riding in a BMW convertible with the president of another, GSD&M, according to people familiar with the matter.
And she attended a September dinner given by Draft FCB at the Manhattan hot spot Nobu, during which she lavishly praised the ad agency and appeared to suggest it had the upper hand in the contest more than a month before an official announcement of the winner was due.
At the dinner, Ms. Roehm spoke about how Draft FCB, formed this year by the merger of the Draft and Foote Cone & Belding agencies, might be the model of the ad agency of the future, said one attendee, Linda Fidelman, president of Advice and Advisors in New York, a consulting company that helps marketers search for advertising agencies.
Ms. Fidelman said she asked Ms. Roehm why she appeared at the dinner and whether the other ad agencies being considered along with Draft FCB were upset. Ms. Roehm’s reply, according to Ms. Fidelman, was along the lines of “if you don’t ask, you don’t get.”
Ms. Fidelman said guests at the dinner were “all fairly flabbergasted,” adding, “I’ve never seen an existing client at one of these things — much less a prospective client.”
One agency executive familiar with the situation, who spoke on the condition of anonymity because the company might become involved in the search for a new ad firm, said that Wal-Mart executives were “turning green” over the Nobu dinner because of the strict Wal-Mart rules that prohibit employees from accepting gifts of any kind — including drinks or meals — from a supplier or potential supplier.
Wal-Mart’s tough standards for employee conduct have become even more stringent since its former vice chairman, Thomas M. Coughlin, pleaded guilty in February to stealing thousands of dollars from the company using fraudulent expense documents and gift cards.
After learning of incidents like the evening at Nobu, and the suspected relationship, Wal-Mart fired Ms. Roehm and Mr. Womack around noon on Monday in terse meetings at the company’s headquarters in Bentonville, Ark.
Three days later, Wal-Mart decided the agency search process had been tainted by the pair’s behavior and should be reopened, according to people briefed on the matter.
But Ms. Roehm said the process of choosing new agencies “was fair and exhaustive; we showed no favoritism.”
Mr. Womack called the process “extraordinarily thorough and fair,” and said he had never had “an improper relationship” with Ms. Roehm. “We are friends.”
The two were among 10 Wal-Mart executives who overwhelmingly voted to use Draft FCB, people involved in the process said.
Mona Williams, a spokeswoman for Wal-Mart, said yesterday that the company had notified Draft FCB “that we have decided to reopen the bid process for our advertising account and that it will not be eligible to participate.” Ms. Williams cited “new information we have obtained over the past few weeks.”
A second agency, Carat USA, part of the Aegis Group, which was selected along with Draft FCB, to handle the media part of the account will be eligible to take part in the second review, Ms. Williams said.
Wal-Mart’s announcement was a crushing blow to Draft FCB, part of the Interpublic Group of Companies, whose stock fell 6.4 percent, or 79 cents a share, to $11.54.
Executives at the agency had been ecstatic to land the Wal-Mart account, which they viewed as a ratification of a merger that married the traditional advertising experience of Foote Cone & Belding with the specialty services of Draft in areas like direct marketing and database management.
Draft FCB was in the early stages of hiring as many as 200 additional employees at its Chicago headquarters to handle the Wal-Mart account. Philippe Krakowsky, an executive vice president at Interpublic, said, “We were disappointed to hear of Wal-Mart’s decision.”
