Unilever calls for new agency models

27 June 2011

LONDON: Unilever, the consumer goods group, is overhauling its corporate structure to reflect changing market conditions, and believes advertising agencies may need to implement similar processes. 

Under its previous set-up, the owner of Dove and Knorr ran units covering Europe, the Americas, and Asia, Africa and Central and Eastern Europe. 

It has now created departments focusing instead on four categories: food, homecare, personal care and refreshment, including ice cream and beverages. 

The head of each division will report directly to Paul Polman, Unilever's CEO, who argued the firm's recalibrated approach should yield several advantages. 

"Over the past few years we have seen a significant step-up in our innovation success rate and our speed to roll them out across markets. The new structure will further accelerate this," he said. 

More broadly, the reorganisation could facilitate targeted investment behind strategic objectives, which are becoming international in emphasis. 

"Unilever now has over half its turnover in the emerging markets, where, over the last ten years, growth has been close to double digits," Polman said. 

"We have an opportunity to better support this footprint of the business, to keep our strong momentum, with a more globally aligned country and category organisation."

Indeed, Polman predicted three-quarters of Unilever's turnover would be drawn from outside Europe and North America by 2020, fuelling the requirement for a fundamental rethink.

"There's a shift of economic power from West to East ... and it's moving fast," he said.

"The scale and speed of growth in the new economic powerhouses of Asia and the other fast-growing markets is changing everything."

"We need our resources, our capabilities and talent pool to reflect where the growth is going to come from, not where it has been – i.e. more in New Delhi than New York." 

This transformation has coincided with the surging uptake of digital technologies, or what Polman called "superconnectivity", meaning ad agencies also face substantial pressure to adapt.

"You're beginning to see the size of the task for us and our agency partners," Polman said, adding that marketing services providers must "organise themselves around the consumer, not the client."

This goal has gained in importance given Unilever is reframing its advertising strategy to suit the evolving environment, prioritising properties like Facebook, which have an increasingly broad reach.

"[We are] reallocating budgets to enable us to make content in an always-on world," he said.

Alongside conducting rigorous in-house digital training, Unilever now expects its agencies to be agile, nimble, and boast impressive credentials when it comes to stimulating online buzz.

"[Agencies must] have a view on how to win in this world shaped by mobile and social," said Polman.

"[The] influence of Facebook cannot be understated ... when I'm in Indonesia I see everyone on Facebook."

Data sourced from Financial Times, Marketing Magazine; additional content by Warc staff