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Saturday, August 29, 2009

Kellogg Eyeing Agency Roster Cut From 30 Shops to Five

Companywide Push Led by Procurement Division

CHICAGO (AdAge.com) -- Kellogg Co. is the latest major marketer to seek to consolidate its ad agency roster during the downturn.

The breakfast behemoth is hardly alone in looking to slash shops from its roster, as marketers such as Anheuser-Busch, Bayer and Emirates Airlines have all done so this year in bids to control costs and, in some cases, to clarify marketing messages by having fewer cooks concoct them.

The Kellogg effort, known internally as "Project Silver," is part of a companywide push led by its procurement division to control costs and designate "preferred vendors," according to people familiar with the matter.

One executive said the company is looking to cut the number of ad agencies with which it works to possibly as few as five or six, down from the 30-plus it works with currently.

Asked for more details, a Kellogg spokeswoman was tight-lipped. "On an ongoing basis, we have discussions across the broad remit of our partnerships regarding maximizing the effectiveness and efficiency of our operations and efforts," she said with an e-mail to a request for a telephone interview. "Those ongoing conversations are confidential."

Kellogg's primary global creative agencies are Publicis Groupe's Leo Burnett and WPP's JWT, although it's not clear whether this review, which will commence next month, threatens either agency's status. Of course, even if the result of the review only affects shops on the margins, the dollars involved are likely to be significant, seeing as Kellogg's global ad budget is the 29th largest in the world, exceeding $1 billion, according to Ad Age's December ranking of the top global marketers.

The Battle Creek, Mich.-based marketer works with a long list of agencies across multiple disciplines all over the world, including Burnett, Euro RSCG, Starcom, Rivet, Arc, Cole & Weber, Marketing Drive, Amazon Advertising, Lapiz and WonderGroup in the U.S. alone.

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Contributing: Rupal Parekh, Michael Bush, Kunur Patel

Source: http://adage.com/agencynews/article?article_id=138654

Good thing of crisis is it's forcing marketers to be more efficient even faster. Currently, all big brand owners around the world have initiated projects to streamline their operations and trimming the agency rosters to lower its biggest part of marketing spending. Negotiating fees, reprioritizing marketing projects, cutting down production cost elements, consolidating numerous smaller agencies to fewer, bigger end-to-end lead agencies are some ways taken by big players to press the costs down.

However, advertisers need to ensure that the marketing group (key service user) work closely with related purchasing functions (including legal) with clear objectives & guidance not to compromise the quality while openly communicate the changes to the agencies partners so that the intent is really fruitful.

On the other side, agencies should have expected this to happen & not felt discouraged. It's a wake-up call for the firms to run even more efficient operations in order to keep pace with client's demand and strengthen the value added creation that sets them apart from the pack.