In a second quarter earnings call, Graeme Pitkethly, chief financial officer at the FMCG giant, reported that the business had already saved more than €1bn in the first half of the year, including over €300m in Brand & Marketing investment through the use of zero-based budgeting (ZBB).
“ZBB is helping us to reduce wasted investment, to drive efficiencies and to improve effectiveness,” he declared.
Elaborating on this theme, he explained that an internal analysis had shown the business had been producing too many new pieces of advertising.
“More than 95% of our advertising films were being replaced before they had reached their maximum effectiveness,” he said – creating a lot of wasted work both internally and for agencies.
“By managing this better and running films for longer, our spend is down in agencies by about 17% in the first half.”
As well as that, the business has looked more closely at production costs and, through the use of a wider range of production houses and lower-cost locations, has lowered the average cost per film by 14%.
“We’ve also tightened our disciplines around media planning,” Pitkethly added, citing the example of Southeast Asia where, by addressing ad overexposure, media spend has been reduced by 12%.
Looking ahead to the second half, however, he added that “we expect Brand & Marketing investment, in absolute terms, to be maintained at or around last year’s levels”. That’s in part because of support for a series of new product launches planned for that period.
Chief executive Paul Polman noted that the Connected 4 Growth program announced last year has resulted in a more agile organisation, where local marketers have been empowered, and resourced, to develop local innovations – 25% more this year so far.
“It’s clear that our innovation plans have never been stronger, “ he maintained. “Our global innovations have more differentiated technologies. We’re stepping up our expansion into white spaces. And we’re better able to meet local trends more quickly.”
Data sourced from Unilever; additional content by WARC staff