Unilever is shedding all of its individual agency relationships in favour of holding company-wide arrangements, according to the FMCG giant’s chief executive.
Alan Jope said Unilever was not looking to increase or decrease the number of agencies on its roster, but instead it is structuring its relationships with holding companies rather than individual agencies.
He continued: "I know that WPP have got all the talent that we need to solve our brand problems, and so do Omnicom, so do Interpublic. What I don’t want to do is just have a relationship with one narrow vertical just within WPP.
"We’ll give them a problem and I want them to go find within WPP the expertise and talent to work on solving our problems.
"We’re two-thirds of the way through shifting our brand relationships to the holding company level rather than the individual sub-brands. That is already the norm and will be company-wide."
In April 2017, Unilever announced plans to halve the number of agencies it worked with, cut the amount of advertising it creates by 30% and expand its in-house U-Studios. In March, Unilever said it saved more than €500m (£444.2m) last year due to the efficiencies of in-housing and reusing assets.
Jope said Unilever will "never reach the end of the journey on how you assemble a constellation of creative partners", but it was increasingly working with entertainment companies in Hollywood and Bollywood, TV broadcasters such as Cartoon Network and sports franchises.
Reports of the death of interruption-based advertising have been somewhat exagerated
An example of thinking differently was Sure for Men's 2017 activation in partnership with Chelsea Football Club and Formula One to create a film that pitted car-loving footballer Eden Hazard against football fan and F1 driver Felipe Massa.
The spot, which was supported by CSM Sport & Entertainment, came about after Sure for Men "ran out of money", Jope explained.
He said: "We put this up and brand equity went up, market share went up and sales went up, all because we were producing something that people wanted to see and engage with."
Although he stopped short of predicting the death of interruption-based advertising, Jope expected there to be a "diminution of the proportion of brand investment that goes against interruption-based models".
Jope was speaking at a roundtable at Cannes Lions today after using his speech on the main stage at the Palais des Festivals to warn against "woke-washing" brands that attempt to use purposeful marketing without backing it up with what they do as a business.
Unilever promoted Jope, who started at the company as a marketing graduate trainee in 1985, to chief executive in November 2018 after the retirement of Paul Polman. He started the role in January.
Jope is currently recruiting to replace Keith Weed, who left his post as chief marketing and communications officer in May. The role will be slightly different, Jope said: "We will chop off 20% and add 20%. It will still be a chief marketing officer and then we will bolt on a few things."
In search of a higher order
Earlier this week, Procter & Gamble's chief brand officer, Marc Pritchard, suggested that Facebook and Google should be "given credit" for the work they are doing to clean up and improve third-party measurement. In contrast, Jope said they are not moving fast enough.
He said: "I do not think any of these companies are bad actors. I do think they're growing so quickly and the technology and environments are changing so fast around them that they're struggling to keep up. They've all made impressive advances and are not moving fast enough."
When asked if he is planning to keep Unilever’s commitment to responsible business, Jope gave the question short shrift: "Doing business responsibly is in our DNA. When William Lever founded our business, he wrote down the mission of the firm as being to make cleanliness commonplace and lessen the load for women. Think about that, 130 years ago – to lessen the load for women."
Currently, just over half of Unilever’s turnover comes from brands that it considers to be purpose-led and Jope predicts that proportion to reach 80% in a few years' time. Although it has not set any deadlines, Unilever will dispose of brands it cannot find a higher purpose for.
When pushed to give an example of one brand that was struggling to find its purpose, Jope gave the example of US bodywash Caress.
He explained: "Caress has competed on a platform of soft skin and nice fragrance for a long time. We have struggled to find something of a higher order that that brand can stand for.
"What’s our response to that? We’ve put some of our really best people on Caress and said: ‘Right, you see if you can puzzle it out.’"
Jope said simply making skin soft is not enough to drive preference any more: "Consumers want to know what’s behind the brand. Standing still when the world is moving forward is not a route to survival and growth. Ninety-one per cent of millennials will switch brands for one that is championing a cause."
Nice purpose, but where's the profit?
Looking forward, Jope said there are three things he would like the company to be famous for over the coming years: "I don’t think I’ve said this publicly before, but number one is to be recognised as having an unbelievable stable of purpose-led brands.
"Number two is to put to bed the argument about whether purpose leads to better financial outcomes. I want to prove unequivocally that running your business responsibly generates better financial outcomes for investors.
"And the third is to be a beacon of diversity and inclusion in all broadly defined ways. We started with gender; we’re now doing a lot of work with disability, creating opportunities for people with disabilities in the company."
There is growing evidence that investment funds that choose companies to invest in based on their environmental and social impact and how well they are governed outperform general market funds, Jope said.
He continued: "We want to be a big contributor to that argument. There are still some investors that say: ‘Very good on this purpose thing, but where’s the profit?’ And we want to prove purpose leads to better profits."