Toronto ad agency MDC Partners has scored Target's advertising account for Canada.
It isn't every day that stocking shelves at a U.S. discount store can lead to one of the most coveted marketing assignments in Canadian retailing. But that's precisely what happened to a Toronto-based ad executive at Target Corp.
In May, Nick Dean donned the chain's staff garb of red golf shirt and khakis to work the floor of a Minneapolis-area store. He was intent on picking up insights about the U.S. retailer – and snaring its ad business, estimated at up to $50-million annually, for the chain's 2013 launch in Canada.
While there, he noticed an employee who not only helped a shopper find a home storage unit, but also carried it out to her car. In its subsequent pitch to the company, his team – from marketing firm MDC Partners of Toronto – seized on Target's attentive sales staff as a way it could stand out from its soon-to-be discount archrival, Wal-Mart Canada. Impressed with their approach, Target executives hired MDC of Toronto late last month, handing it one of its biggest tests yet.
"They went well beyond the assignment, ultimately into territory that we had not asked them to explore," Michael Francis, Target's chief marketing officer, said in an interview. "They were spot on."
Now that MDC has won the prize, the hard work really begins. It must sell Target to Canadians as a compelling alternative that offers more fashion and home decor flair than its discount nemesis, Wal-Mart. The stakes are high: The chain is spending billions of dollars to open its doors here, its first foray outside the U.S. and a testing ground for further international expansion.
Yet the Minneapolis-based retailer has given Wal-Mart and other Canadian incumbents plenty of advance notice to pump up their own stores before it arrives. Target announced last January it was purchasing up to 220 Zellers stores and converting them to its own banner starting in 2013.
"It's certainly a risk, giving competitors a head start to prepare for Target's entry," said Neil Currie, an analyst at Dahlman Rose & Co. in New York. "But it's two years for Target to whet people's appetite as well."
All of which makes MDC's task even more urgent. It has to spread the Target gospel to shoppers who have mostly never stepped into one of its stores. According to Target's research, 70 per cent of Canadians are familiar with its brand, but only 10 per cent have actually shopped at a U.S. Target outlet.
The marketing firm will have plenty of resources to work with. Target is a relatively big ad spender compared with Wal-Mart. With $67.4-billion (U.S.) of sales last year, Target shelled out 0.85 per cent of its total revenues on non-Internet advertising, more than four times the proportion – 0.18 per cent – that Wal-Mart spent on ads for its U.S. stores (whose sales were $260-billion), according to Globe and Mail estimates based on 2010 (non-Internet) ad data from market researcher Nielsen.
The chains' marketing differs in other ways as well. While Wal-Mart tends to focus on low prices, Target tries to add an emotional dimension, using wit, humour and popular music. Its recent U.S. spots featured Beyoncé, who provided the chain with exclusive material in her Target-sold album (
"Target is saying: 'We're slightly smarter, slightly more stylish,'" said Patrick Barwise, professor emeritus of management and marketing at London Business School and co-author of the book Simply Better, which touches on Target's cheap-chic image. "I would assume the strategy will be very similar in Canada."
Still, Target faces a savvier marketing rival in Wal-Mart today than in the past, Dahlman's Mr. Currie noted. Wal-Mart has evolved. It does more image-based advertising, and changed its tagline to a softer "Save money. Live better" a few years ago from the harder-hitting "We sell for less." Even so, pinched by bargain-hungry consumers, Wal-Mart this year renewed its focus on its "everyday low prices" strategy. Its U.S. division even added another bargain-asserting slogan: "Low prices. Every day. On everything."
Mr. Francis at Target said that MDC's research confirmed what consumers here already had told the retailer: "Bring Target to life in its entirety in Canada," rather than a watered-down approach.
Ads here will use the company's long-time tagline: "Expect more, pay less" along with its trademark red bull's-eye logo. But they will emphasize, more than usual, Target's sweet spot – affordable, stylish apparel and home fashions – and its philanthropy (it donates 5 per cent of annual pre-tax profit to local communities), Mr. Francis said. Target ads will also underline nuances among different regions: For instance, the marketing campaign will highlight outdoor fashions in the Vancouver market, career wear in Toronto and the retailer's European designer collections in Quebec, he said.
Target teams up with high-profile designers, such as Zac Posen and Anna Sui, to bolster its style profile and develop lines for its stores. Now it's looking to add Canadian talent to that lineup.
"We believe that Canadian designers are as relevant in New York and Topeka as they would be in Toronto and Montreal, just as we've done with designers in Paris and London – we've brought them to life throughout the chain," Mr. Francis said.
In vying for Target Canada's ad business (there were three other agencies on the short list), MDC went beyond what was asked, pulling together a grand-opening multi-media campaign that included digital and traditional ads, events and publicity, he said. MDC's multi-disciplinary expertise gave it an edge, with its kbs+p ad agency in Canada, of which Mr. Dean is a vice-president, public relations firm Veritas Communications and Northstar Research Partners. Kbs+p had an additional advantage: One of its forming agencies had previously worked on Wal-Mart Canada's ad account.
In May, Mr. Dean and a colleague joined the front-line of employees at a Target store, and it was there they observed first-hand the chain's customer-service edge – Target has up to twice as many staff in its outlets as does a typical Zellers, its officials say.
Now the marketing firm's challenge is to persuade Canadians that a trip to Target will fit the bill better than a spree at Wal-Mart.