Markets

Levi's Needs the Steve Jobs of Jeans to Rescue It From Brand-Management Turmoil

By Jim Edwards

Updated on: September 23, 2010 / 12:07 PM EDT / MoneyWatch

At first glance, it's puzzling that Levi Strauss & Co. has put its $100 million ad media buying account up for competitive bid. Sales are up, according to its Q1 2010 earnings report, and the company earned kudos for its "Guy walks across America" video, which has earned 2.2 million views online (it's a stop-action masterpiece consisting of thousands of photos of a man literally walking across the U.S.).

But in fact Levi's management is in a state of turmoil. It's been that way for years. Some recent developments:

Chief marketing officer Jaime Cohen Szulc left last month after only a year on the job.
Chief strategy officer Larry Ruff is heading marketing in the interim -- which means Levi's may have to find a third marketing chief in the coming weeks.
The company's Super Bowl ad for Dockers was screwed up, being placed next to another ad with a similar "no pants" theme.
And the company annoyed its current media buyer, Omnicom (OMC)'s OMD, by asking it to be more transparent about the price of media it was buying for other companies.
The creative side of the business is currently at Wieden & Kennedy, which got the account after a review in 2008. Yes, this client is addicted to ad agency reviews. Given the turnover on the client side, agencies might want to make spec pitches for that business, too.

If you crunch Levi's numbers, it turns out that the company's advertising is working less and less well. Even though sales are up, Levi's spent nearly 20 percent more on ads to get that rise. The sales yield on every dollar spent is actually in decline by more than $1,000:

Ad budget, Net sales, Per $ Yield
Q1 2010: $71.1, $957,959, $13,473
Q1 2009: $59.7, $886,519, $14,849

There you have it: A new media agency won't turn this ship around. What's needed is stability at the client on the marketing and product design side. Levi's needs the Steve Jobs of jeans to appear and rescue them. Anyone?

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