How a highflier in marketing fell at Wal-Mart
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By GARY MCWILLIAMS,
NEAL E. BOUDETTE
At the warehouse-like headquarters of Wal-Mart Stores Inc. in Bentonville, Ark., where everyone from the chief executive on down is considered an "associate," Julie Roehm stood out. Last summer she brought paint, brushes and a stepladder to her office and, working until midnight, covered its battleship-gray walls in bright chartreuse.
Wal-Mart hired the 36-year-old executive away from car maker DaimlerChrysler AG in January to shake up its marketing department, widely seen as a sleepy province turning out ads with smiley faces and drab reminders about low prices. The nation's largest retailer, besieged by political opponents and upscale competitors, felt it needed to bring its brand into the 21st century.
Ms. Roehm's trajectory through the automotive industry had been remarkable. Her car ideas were aggressive and contemporary, her ads saucy and memorable. One double-entendre-laced TV commercial showed men at a urinal talking about the size of a truck. She worked with rock bands, pushed for videogame advertising and championed new research techniques. Occasionally she ran afoul of Chrysler executives' tastes -- such as when she wanted to sponsor a football game with lingerie-clad models, an idea that was nixed after an outcry.
In her new job as Wal-Mart's senior vice president for marketing communications, she moved swiftly. She produced new ads that took pokes at rivals, sponsored football on ESPN and hired a new advertising agency for Wal-Mart's $580 million account, Interpublic Group's Draft FCB. The agency raised eyebrows in Arkansas shortly afterward, when it touted an unrelated achievement by taking out a full-page ad in a trade publication depicting a male lion mounting a female. The tag line said: "It's Good to Be on Top."
Ms. Roehm was ready for cultural friction. She had learned that change agents had to expect it. "Anytime there's someone new or who represents change, you always get a feeling that's not always welcoming," she said in an interview last week. She conceded: "My visibility created a general amount of animosity."
Last week, Wal-Mart fired Ms. Roehm and a protege, Sean Womack. Two days later, it dumped Draft FCB as well. Wal-Mart questioned Ms. Roehm about whether she had a personal relationship with Mr. Womack -- forbidden at the company -- or accepted gifts from ad agencies, also forbidden. Both deny that they behaved improperly.
Ms. Roehm's awkward departure writes a new chapter in an ongoing rivalry in Bentonville. Wal-Mart built a retailing juggernaut by procuring products at low cost and passing the savings to consumers. But in recent years Chief Executive H. Lee Scott Jr. has begun to lend an ear to young marketers preaching brand-building and advertising pizzazz. One goal, as the chain's sales growth slows, is to persuade higher-end customers that they can pursue their lifestyle with Wal-Mart products. A stronger brand could also improve Wal-Mart's image as it receives a barrage of criticism over issues such as its employees' pay and benefits.
The Roehm debacle may test Mr. Scott's resolve about the course shift, especially because sales failed to improve during her brief term. But the troubles that prompted Ms. Roehm's hiring remain, and going back to the old ways isn't an attractive option either.
Born in Wisconsin to a salesman father, Julie Roehm moved with her family to half a dozen Midwest states as she was growing up. A standout in math and science at an all-girls Catholic high school in Cincinnati, she went on to attend Purdue University, earning a bachelor's degree in civil engineering in 1993.
Summer jobs at Bristol-Myers Squibb Co. in Indiana, where she met her husband, Michael, got her interested in business. Ms. Roehm studied marketing at the University of Chicago's business school. Michael is now a stay-at-home dad taking care of their two children.
In 1995, she was hired as a product planner by Ford Motor Co. Four years later, she was assigned to market a new Ford Focus compact, competing in a cutthroat segment dominated by Japanese models. To attract buzz and draw younger buyers, Ms. Roehm struck partnerships with other marketers to offer limited editions of the car aimed at trendy young people. A Sony edition featured a high-end stereo system. Another version was sold with a Kona mountain bike. To spur word of mouth, she let personal assistants of Hollywood celebrities drive Focuses for several months free of charge.
Her work brought a promotion in 2000 to head of marketing communications for all Ford-branded vehicles. A year later, her boss at Ford, James Schroer, jumped to Chrysler, and she followed.
At the time, Chrysler was racking up big losses. Ms. Roehm was put in charge of resurrecting the Dodge brand, a distant third behind Ford and Chevrolet in trucks and a weak player in cars. Her Dodge team quickly developed a new advertising campaign built around the slogan "Grab Life by the Horns" and featuring music by the band Aerosmith.
When Aerosmith made an appearance at Chrysler headquarters in Auburn Hills, Mich., many employees got their first look at the new marketing whiz. Ms. Roehm appeared on stage visibly pregnant and wearing leather pants.
Ms. Roehm also stirred attention with her racy advertisements. A 2003 Dodge ad that ran on late-night TV showed two men standing at a urinal. "That's big," one says. "It's seven inches longer," the other replies. The camera pulls back to show they are talking about a Dodge Durango sport-utility vehicle on a poster.
Her high point may have been the marketing for Dodge's "Hemi" engine, named after the V-8 motor that had powered iconic muscle cars of the 1960s and 1970s. Commercials developed under Ms. Roehm featured two men asking the driver of a Ram truck, "That thing got a Hemi?" Sales of the engine took off, pushing up Chrysler's profits.
"Julie deserves a lot of credit for the Hemi," says Chrysler spokesman Michael Aberlich.
At Chrysler, Ms. Roehm pioneered spending on videogames and the Internet. Chrysler promoted its Jeep brand in 2002 by commissioning a videogame in which players drive a Wrangler Rubicon up steep inclines and across rivers.
Ms. Roehm stirred up a hornets' nest in 2004 by agreeing to have Dodge sponsor a pay-for-view event tied to that year's Super Bowl. The "Lingerie Bowl" had scantily clad women playing football. She said in an interview at the time that she had told her boss the event would help get Dodge into the Super Bowl spotlight. But after car dealers and conservative groups complained, Chrysler executives withdrew the sponsorship. Ms. Roehm says she accepted responsibility for making a decision that upset people but notes, "They weren't going to be naked."
Ms. Roehm is "a take-charge young lady," says Jack Carroll, a Dodge dealer in Washington state. "Is she an aggressive marketer? Absolutely. Does she take risks? Absolutely."
It wasn't just glitz that fed Ms. Roehm's reputation. She introduced return-on-investment techniques to Chrysler's advertising campaigns, requiring agencies to develop hard measures of a campaign's success such as customer awareness.
Ms. Roehm roiled the advertising business in early 2005 when she publicly attacked the television networks' "upfront" process, the annual event in May during which the networks sell about 80 percent of their ad time for the fall season. It is a time for networks to wine and dine advertisers and parade TV celebrities before them. Like many advertisers, Chrysler had grown leery of committing to ad purchases so far in advance.
Ms. Roehm thought ad time should be sold like stocks on the Nasdaq Stock Market, where computers match buyers and sellers. "She woke everyone up," says Joe Tripodi, Allstate Corp.'s chief marketing officer. "We weren't going to see substantial change in the upfront until the big-spending car companies and Procter & Gamble stood up. She was the first to stand up."
All the buzz got the attention of Wal-Mart. The retail chain had largely saturated rural markets. Its expansion into big cities faced fierce opposition from unions and others who saw Wal-Mart as a down-market chain that treated its workers poorly. Tired of appearing a drab alternative to Target Corp., Wal-Mart wanted upper- and middle-income consumers to think of it as a place to buy high-quality goods at a reasonable price. The company created a marketing team, opened a trend-spotting outpost in New York City, and hired models for ads. (It previously used store employees.) It began selling flashy evening wear with advertisements in Vogue.
Ms. Roehm seemed like the right choice to dial up Wal-Mart's new style of marketing. She was hired in January.
Her edgy style scored some successes. A television-marketing campaign tied to Wal-Mart's sponsorship of ESPN Monday Night Football has paid off. The campaign uses a character called Blaine as a foil for the big electronics retailer Best Buy Co. "Blaine" slickly spouts technology jargon and talks about rebates and reward programs instead of what Wal-Mart calls its simple low prices on large flat-screen TVs. Wal-Mart says comparable-store sales of flat-screen TVs have more than doubled this year.
Wal-Mart's marketers pushed the retailer into nightclub fashions, Martha Stewart-style home decor and other high-class products. The moves drew boos from merchandising executives within Wal-Mart, who didn't see evidence that the new products were helping sales. The company has said apparel and home furnishings are among its weakest performers. Wal-Mart recently projected same-store sales for December would be flat or up just 1 percent from the same month a year earlier. Same-store sales fell slightly in November.
Ads have returned to emphasizing low prices after a brief run for a lifestyle campaign that sought to imitate Target's chic. Recently, a holiday ad that showed a husband giving his wife satin lingerie was pulled. Meant to be humorous, the ad received complaints and was ordered canceled by Mr. Scott, the CEO, say people familiar with the situation. A Wal-Mart spokeswoman declined to discuss Mr. Scott's role and said that in general, "Our ads evolve based on what customers tell us is important to them."
For much of their time at Wal-Mart, Ms. Roehm and Mr. Womack were busy choosing Wal-Mart's new ad agency. About a month before Wal-Mart selected Draft FCB, the pair attended a dinner party at the trendy Manhattan eatery Nobu thrown by Draft for a group of consultants. The dinner was not part of Wal-Mart's review. About 80 guests were treated to a cocktail hour and a dinner with more than 10 courses including Kobe beef, lobster, scallops and sushi, according to three people who attended the party. Beverages included lychee martinis, recalls one guest.
Ms. Roehm also made a speech to the group earlier that day about Draft's capabilities. Some attendees felt she was promoting the agency, implying favoritism that is frowned upon when an advertiser is reviewing agency candidates.
Wal-Mart's review process included some social events. Ogilvy & Mather threw a barbeque at its headquarters in New York after a presentation, while Draft held a cocktail party in Chicago.
During the review process, the chief executive of Draft FCB, Howard Draft, gave Ms. Roehm a Toy brand watch and a case of Effen vodka, according to a person familiar with the matter. Ms. Roehm "paid for a couple items of nominal value," says a Draft FCB spokesman, Walter Petersen, who confirms that the items were a watch and vodka. Ms. Roehm also confirms receiving the items and paying for them.
More than two months after the Nobu dinner, Ms. Roehm was called to a meeting and asked if she and Mr. Womack, who reported to her, were having a personal relationship or had violated the company's policy on gifts, according to someone who was told of the meeting by Ms. Roehm. Wal-Mart employees aren't allowed to accept even a cup of coffee from a supplier or potential supplier without paying for it. Ms. Roehm told Wal-Mart the accusations were inaccurate. In an interview, she flatly denies any affair and says she has tried to comply with company policies. Mr. Womack also denies an affair or any improper behavior.
Wal-Mart said on Dec. 5 that the two had been dismissed. It won't say why other than suggest that its strict gratuity policy was at issue. Ms. Roehm says she didn't have an employment contract or any severance arrangements.
"Paying for meals is a really big thing. We did that," says Ms. Roehm. "If it was a big party and things were passed around, we told all our agencies to bill us back. Our assumption is they did."
The suggestion that Ms. Roehm violated Wal-Mart's gratuity policy "is incredibly hard to believe," says Ann Fandozzi, a Chrysler manager. "I've personally seen Julie ask her administrative assistant to send back" a small gift.
"Automotive advertising is driven by image and lot of Wal-Mart's advertising is driven by low price, so it was a clash of an image person going to a company that is not about image," says Roger Adams, formerly executive director of corporate advertising at General Motors Corp. and now chief marketing officer at Home Depot.
Although Madison Avenue has never been shy about wooing clients with lavish parties or trips, major companies are setting tighter guidelines on what executives can receive. Procter & Gamble, the nation's largest advertiser, says executives are allowed to accept business meals that are "minor in terms of the overall relationship with the giver" but P&G should pay for meals "on a relatively equal number of occasions." At Wal-Mart, where executives double up in hotel rooms and rent compact cars, the rules are even stricter.
Late last week, Wal-Mart put its president of U.S. stores in charge of hiring Draft FCB's replacement rather than Ms. Roehm's boss, Chief Marketing Officer John Fleming, according to people at ad agencies hoping to win Wal-Mart's business. Wal-Mart's spokeswoman says Mr. Fleming will oversee the review.
Ms. Roehm says she believes Wal-Mart decided it no longer wanted to pursue the approach embodied by the new advertising agency. "They had a change from a strategic point of view. That's their prerogative," she says. She adds that she is thinking of starting her own marketing company, perhaps with Mr. Womack.