Sweet Spot: Danone Plans Media Review, $500 Mil In Ad Spend

by Steve McClellan, Jun 26, 2012, 3:19 PM

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Danone, the French dairy products company and parent of Dannon Yogurt is planning a media agency review, according to sources.  The exact timing is unclear, but sources report it will get underway this summer and perhaps as early as next month.  

The company spends an estimated $500 million annually on ads worldwide. In the U.S. the firm spent about $80 million on ads in 2011, according to Kantar Media, but the client has indicated that it sees the U.S. as one of its “high growth potential” markets.

The last time the client assessed its media agency roster was in 2009 when it held a series of reviews on a region-by-region basis. This time around all or most of the company’s global media agency assignment is said to be up for grabs in a single review, per sources.

The company has relied on a number of holding-company media shops to handle various assignments worldwide.

Havas’ MPG retained the North American portion of the assignment when it was reviewed three years ago. It also handled media duties for the client in its home market of France, Spain and Portugal.

Omnicom’s OMD has been the client’s media agency in China, where the company spends over $100 million on ads. WPP’s MEC has handled the UK, Mexico and Russia, while sibling agency MediaCom has serviced Germany and the Czech Republic.

Mindshare has handled Italy; Aegis Group’s Carat has had assignments in Austria and Belgium.

Like many European-based companies, Danone has struggled with the economy. It recently issued new financial performance guidance for 2012, noting that “since the end of the first quarter, the Group has faced a swift deterioration in consumption in Southern Europe that has proven steeper than anticipated, especially in Spain… In addition, inflation in the Group's raw material costs has been stronger than anticipated since the beginning of the year.”

The company said its operating profit margin for the year would probably drop by half a percentage point on a “like for like basis,” although it stated that its sales growth forecast range for the full year remains unchanged: 5% to 7%.

Last year, Danone reported sales of approximately $24 billion. Its footprint has changed dramatically over that past 15 years. In 1997, 80% of company sales were derived from Western Europe, whereas now the region accounts for just 38% of sales, while emerging markets account for 51% of sales, according to the company.

Incumbent agencies declined to comment or referred calls to the client. Danone reps didn’t respond to queries about the upcoming review. 

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