Unilever to up marketing investment in second half of the year after massive cutbacks

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Source: TheDrum

Unilever has committed to up its brand and marketing investment in the second half of the year as it seeks “accelerated” growth following a “substantial” increase in first-half profits.

The Dove and Persil owner has been on an efficiencies drive when it comes to advertising spend following a move to zero-based budgeting, revealing earlier this year that it would slash its ad production by as much as 30% and the some 3,000 agencies it worked with by as much as half in a bid to manage costs.

Updating on the progress, it revealed that spend on agency fees is down 17% compared to 2016 while the production cost of TV ads is down 14%.

“Zero-based budgeting is improving our productivity in brand and marketing investment as we reduce the cost of advertising production,” said chief executive Paul Polman.

Thanks to the “discipline” in this savings programme and “recalibration of advertising spend” across markets, Unilever saw underlying sales grow 3% while profit before tax rose to €4.6bn from €3.6bn in the same period last year.

“Our first half results show continued growth well ahead of our markets and a substantial step-up in profitability despite the persisting volatile global trading environment,” continued Polman.

He went on to add that the “transformation of Unilever into a more resilient, more competitive and more profitable business is accelerating” and as a result it will “step-up” brand and marketing investment, meaning that total ad spend will be “maintained at last year’s level in absolute terms.”

However, this won’t necessarily be welcome news for agencies – namely holding group WPP, which has felt the impact from Unilever’s titanic shift.

The FMCG giant has been assembling a raft of in-house content studios dubbed U-Studio (for digital content) and U-Entertainment (focused on entertainment-driven content like web series, games and music integration), which have been taking greater portions of advertising budgets since being established last year.