April 17, 2018
"After a modest increase in 2017, marketing budgets are still very uncertain for the coming year. Unilever announced recently that it was cutting its ads by 30 percent and that it was slashing the number of agencies it works with by half. P&G made a similar statement, saying it was reducing agency and production fees in its $7.1 billion annual budget.
As two of the biggest advertisers in the world, these announcements sparked more than a little consternation among marketing agencies. If budget cuts become commonplace, agencies may find themselves in conflict with their clients. Why? Because as budgets are dropping, the cost of talent is on the rise.
With multinational brands of Unilever and P&G's size scaling back, things could become unwieldy, so regrouping makes sense. But brands can’t achieve a satisfactory return on investment without efficient tactics, and agencies often play a role in ensuring that brands get their advertising right. An agency’s job is to grow its clients’ brands, which comes at a cost. Ultimately, though, those investments should yield profitable results for both the client and the agency."
Read the full article here.