Unilever ups ad spend by €300m in 2 years thanks to agency cutbacks

Jope said reinvestment was 'being funded by a reduction in things like advertising, production and agency fees' / UNILEVER AD AGENCY CUTBACKS

Savings from Unilever's ongoing business efficiency drive have helped the Marmite and Dove owner reinvest in marketing to the tune of €300m over the past two years.

The figure has increased by some €50m on the same period last year, when the business revealed it had spent an additional €250m on media in 2017 after slashing the number of agencies it worked with and bringing certain elements of its marketing mix in-house via its U-Studio and U-Entertainment hubs.

Speaking during the company's Q1 2019 earnings call on Thursday (18 April) recently-instated chief executive Alan Jope told investors the FMCG giant had spent €300m more on "working media" and "point-of-sale" over the course of the past 24 months.

Jope said this was "being funded by a reduction in things like advertising, production and agency fees, things that the consumer doesn't see".

"And so, we're reasonably confident that we continue to support our brands at competitive levels," he added.

Jope said the company's overall "efficiencies programs" were on track to drive the €2bn of savings it needs in perpetuity every year.

"I want to underscore that our financial model begins with those efficiencies creating the funds that we can choose where we redeploy them, and how much we turn to the bottom line," he noted.

A significant part of the savings have been driven by cutting the number of agencies it works with and bringing content and digital work in-house.

Back in March, the company's annual report detailed how such measures had helped it save €500m on brand and marketing investment in 2018. However, Jope's comments show it is sticking to its commitment to reinvest some of those savings.

At the start of this year, Unilever further consolidated its agency roster by bundling the ad business for its entire UK homecare portfolio into indie shop AnalagFolk.

The move dovetailed with the group enlisting AnalogFolk to handle digital for its UK food portfolio last year, handing it responsibility for Marmite, Knorr, Colman's and Pot Noodle in a move that is believed to have displaced around 20 agencies.

Increasingly, Unilever has been focused on its 28 'people data centers' which aim to help it edge closer to its goal of "one-to-one marketing at scale". The hubs comprise programmatic capabilities, real-time insights and Unilever’s in-house content production division U-Studio.

Outgoing chief marketing officer Keith Weed hasn't been shy in his view that agencies "haven't moved fast enough" to help brands enact this vision of mass personalisation at scale.

"Agencies shouldn't be enabling companies like ours to [build their own data centres], they should be ahead of us and they should offer us that service themselves," he said last year.

"Consumers and technology are moving faster than the industry, as marketers we used to lead consumers, now marketers are chasing to get ahead."

He has also bemoaned agency pricing structures, saying the industry should come together to create a "fit for purpose, competitive model" that works for brands are being pushed to create more content than ever.

Of late, Weed has also been focused on bringing greater transparency to Unilever's digital supply chain with the launch of its 'trusted publishers' network.

Speculation over how, and if, Unilever will fill its chief marketing officer role continues to mount in lieu of the Lynx owner naming a replacement.

With Weed set to leave at the end of this month, however, Jope has hinted that marketing will still have a seat at the top table.

Unilever reported stronger-than-expected sales growth of 3.1% for the first quarter, beating analysts’ expectations of 2.8%.

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