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.