Unilever plans to continue bringing marketing functions in-house
- Unilever invested an additional $300 million-plus in media buying and in-store advertising in 2017, enabled by a continuation of its strategy of moving some marketing elements in-house and reducing the number of agencies it works with, company executives said on a quarterly earnings call reported by The Drum. The CPG giant's "5-S savings program" and its budgeting strategy have helped save around $2 billion.
- Unilever reported flat brand and marketing investment compared with the previous year, but relying on its in-house advertising agency U-Studio helped eliminate waste in areas where the company said it had previously "over-saturated traditional media channels," which led to a more than $300 million savings. Unilever plans to continue the strategy in the coming year, per The Drum.
- Unilever reported a 4% sales increase and predicts a 3% to 5% increase in 2018, according to CNBC. E-commerce sales also increased nearly two-fold to about $2.5 billion, Ad Age reported.
Pivoting to focus on fewer, high-quality ads and investing more heavily in digital is paying off for Unilever. The launch of its in-house agency U-Studio in 2016 helped the company save money on advertising production and placement, per The Drum. The more efficient and effective campaigns helped the company save billions in brand and marketing spend.
Unilever isn't alone in pursuing this strategy. Many large companies, especially major CPGs, are changing their marketing structures and moving more functions in-house as they try to become more agile. Proctor & Gamble announced in its recent earnings report that it will continue consolidating and upgrading its agency capabilities. P&G had previously cut the number of agencies it uses by 60%, which saved the company $750 million in agency and production costs and improved cash flow by more than $400 million. The company said it will reduce the number of agencies it works with by another 50%, which is expected to lead to a $400 million savings through new advertising and media agency models.
Efforts to make marketing strategies more nimble are likely to continue as the role of digital advertising grows and more brands seek control over campaigns and success measures. The right balance of in-house control and the strategic use of agencies is a challenge companies will have to be wary of as they shift more marketing work in-house to avoid cutting themselves off from good ideas that might resonate with consumers.