Unilever To Produce 30% Fewer Ads, Trim Agency Roster

Packaged goods giant Unilever told investors and analysts today that it would produce 30% fewer ads going forward and trim its global creative agency roster by 50%.

In a conference call earlier today, Unilever CFO Graeme Pitkethly said the company employs 3,000 agencies around the world, which will be reduced “by half.”

Pitkethly told the investment community that the firm produces more ads than ever make it to air. The strategy going forward will be to show more of the better ads that make the cut for longer periods of time. 

The plan, he said, “won’t compromise the impact” of the company’s overall advertising and marketing strategy.

The company did not disclose how much it believed it would save by cutting the number of ads it produces and trimming its agency roster. It is estimated that Unilever spends more than $7 billion on advertising worldwide each year.



The stock prices of the four major ad holding companies were all down today -- and WPP, which counts Unilever as one of its biggest clients was down the most, by a little more than 1% in NASDAQ trading on its American Depository Receipts. By contrast, the Dow Jones Average was up slightly.

WPP’s Ogilvy & Mather is the lead agency on Unilever’s Dove account. It also handles a major shopper marketing program for the client in the U.S. and shares media duties for Unilever with Omnicom’s PHD in a number of markets worldwide.

The ad-related reductions are part of a much broader savings program at Unilever that’s targeting 4 billion to 6 billion euros ($4.3 billion to $6.4 billion) over the next three years.

The call with analysts came after a recent offer by Kraft Heinz to acquire Unilever for $143 billion, which Unilever rejected. Kraft Heinz then withdrew the offer.

On the call with analysts, Unilever CEO Paul Polman said a “board review” of the company’s long-term planning concluded that “the strategy is right.”

The firm also said that it was putting its 3 billion euro ($3.2 billion) spreads business on the sales block and that it was combining its Foods and Refreshments divisions to achieve cost efficiencies.



1 comment about "Unilever To Produce 30% Fewer Ads, Trim Agency Roster".
Check to receive email when comments are posted.
  1. Ron Dusenberry from Admaniax, LLC, April 8, 2017 at 12:36 a.m.

    Although I understand Graeme Pitkethly's position as CFO, his approach to advertising is mired in the  traditional (and inefficient) advertising agency/client business model.  His solution is equally as archaic as the problem it is intended to solve: cut the agency roster and advertising becomes more efficient. That is incorrect  

    If the idea is to make advertising agency products more efficient while holding them accountable for their creative recommendations he needs a paradigm shift.  

    The problem, Mr. Pitkethley, is that reducing the agency roster only solves one of the fixed cost marketing department commitments.  It does little, if anything, to improve the other side of the advertising equation: create effective AND efficient product advertising.  The antideluvian ad agency/client model continues to be perpetuated in your approach.  That is a significant problem in your math.

    Solve the equation for advertising ROI and communications accountability and the answer is a new business model which is the prototype for sustainable advertising results AND fiscal responsibilty.

Next story loading loading..