Dive Brief:
- As reported by Ad Age, Unilever is taking the step to "zero base" its marketing budgeting, which will require its marketing management to build budgets from scratch and justify marketing spending.
- The budgeting move is intended to uncover inefficiencies that might otherwise be hidden in previous budgets and result in cost savings in annual marketing spending.
- Last year Unilever bested analyst forecasts with an organic sales increase of 4.1%, and its marketing spending was up 0.02% to 15% of sales.
Dive Insight:
Last year found a record amount of big brand agency relationships under review, an amount that exceeded the previous three years of account reviews combined. By mid-year the figure had reached around $26 billion in agency accounts. The common thread was brands sought better deals and cost savings not only with agency relationships, but also the cost of media buys. Unilever was one of the brands involved in that massive industry shakeup.
Unilever’s decision to implement zero-base marketing budgeting is another step toward cost cutting measures.
"We will make a further step change in our overheads and brand and marketing efficiencies with the global rollout of zero-based budgeting," Unilever CEO Paul Polman told analysts and investors in a presentation.
According to Ad Age, Unilever had already tried zero-base budgeting in Thailand last year, reducing spending 2% as a percentage of sales.