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Thursday, October 25, 2007

Home Depot Seeks CMO -- but, Please, No Rock Stars

Roger Adams' Successor Will Have to Focus on In-Store Efforts
By Mya Frazier Published: October 22, 2007 In an interview just days before he was to address the Association of National Advertisers' annual meeting on the topic of "starting all over," Roger Adams was asked to compare his job with working at his former employer, General Motors Corp. "At Home Depot, it is much faster-paced," he said. "We live day to day. You have to be much faster on your feet."
John Ross, VP-advertising, is interim CMO at Home Depot And how: About a week later, news surfaced that Mr. Adams, chief marketing officer, was leaving to pursue other interests. He was succeeded on an interim basis by John Ross, VP-advertising. The move surprised many -- even at the marketer itself. "People are shocked. No one had an inkling something like this would happen," said a former Home Depot insider. Many shakeupsYet it's not as if departures in the marketing suite are uncommon at Home Depot. Mr. Adams himself reported to four different bosses in less than three years. He was hired by then-CMO John Costello in early 2005, who was replaced by Home Depot veteran Tom Taylor, who then left 11 months later. And with his eventual promotion to CMO from interim head of marketing, Mr. Adams reported to CEO Bob Nardelli, who was then ousted three months later, replaced by Home Depot veteran Frank Blake. "Roger might have just said enough is enough," said the insider. "That's a lot of ego and turmoil and drama to deal with." If so, he isn't saying. Repeated attempts to reach Mr. Adams were unsuccessful. During his short 12-month tenure as CMO, Mr. Adams was credited with hiring more minorities and women in marketing, moving marketing's monthly sales meetings to an actual Home Depot store location and bringing a disciplined database-driven approach to customer-purchase data. No hotshotsBut with Home Depot's back-to-basics shift that focuses on the most basic tenet of marketing -- superior in-store service -- some industry watchers argue that the retailer may simply not need a superstar CMO anymore. "Why should they pay this guy a lot of money since they can't do a lot of marketing until they get the operations fixed?" asked David Gallagher, a recruiter at Boyden Global Executive Search. "I also wouldn't be surprised if they are in no hurry to replace him until they get close to fixing the operational problems." In fact, it was only within the past few years that Home Depot elevated marketing to the same status level within the corporate culture as merchandising. That was a drastic change from the historically merchant-driven culture. But today Home Depot is suffering a continued drop in same-store sales and the consistent loss of market share to its smaller and nimbler rival, Lowe's (see chart). Sports-sponsorships in doubtThe focus on operations calls into question the retailer's nearly $100 million in sports-sponsorship deals. Home Depot has inked an estimated $60 million in deals with Nascar, ESPN Game Day and the Olympics, and that's not counting the NFL pact put together by Mr. Adams -- estimated to be worth nearly $25 million -- according to IEG Sponsorship Report. A Home Depot spokesman declined to answer questions on marketing, the retailer's 14-year relationship with Richards Group or its 15-year relationship with media-buying agency Initiative. Conventional wisdom holds that accounts are most vulnerable after a CMO departure. But given that Mr. Ross is a 10-year veteran, and the chain's intention to return to its roots -- roots that Richards helped shape -- it's far from a sure thing that the $542 million ad account could go up for review.
Source: TNS Retail ForwardAmong Home Depot's other agencies are Digitas, which handled its interactive-marketing account since April 2006; TVP for Hispanic; and UniWorld Group for African-American advertising. Getting consumers into the store to experience revamped service will be a challenge. Jim Robisch, senior partner of The Farnsworth Group, a hardware-industry consulting firm, said research shows that five years ago, 95% of home-improvement shoppers said they read circulars. Today, that's dropped to less than 60%, and in some markets it's as low as 25%. Tough search"As far as creating traffic in the store, the ability to use advertising to do that is falling off," he said. "The search for the next neat way to make that connection with the consumer is a tough one." It's within Home Depot's back-to-basics context that executives familiar with the company say the latest management shifts need to be considered. The back-to-basics approach is also fueling speculation that Mr. Ross will eventually be promoted to CMO. "He's close to Frank and knows [Home Depot founders] Arthur [Blank] and Bernie [Marcus]," said an executive close to the situation. "They are looking for a return to the past. John [Ross] has earned it and deserves it." And wouldn't it be ironic if Home Depot, after five CMOs over the last seven years, eventually promotes an executive to the post who has been there all along?

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