Recently, Unilever’s global CFO said the company overexposed people to advertising across Southeast Asia.
Unilever global CFO Graeme Pitkethly (picture), had said there was a tendency for Unilever to expose consumers to its advertising beyond the point of diminishing returns.
Their analysis found they was producing too many new pieces of advertising, with more than 95% of its as films being replaced before it reached maximum effectiveness.
Earlier this year, he said Unilever plans to reduce the number of ads it commissions by 30% as part of its cost-efficiency drive.
At the epicentre of all this is Zero-Based Budgeting (ZBB).
Last year, Unilever global CEO Paul Polman rolled out zero-based budgeting worldwide – something it tested in Thailand which cut down the spending by 2% as a share of sales.
He added, “We are further strengthening our innovation funnel while shortening innovation cycle times, stepping up our digital capabilities and rolling out a global zero-based budgeting programme.”
Unilever has revealed it was able to reduce its media spend by 12% in the Southeast Asia market through its new zero-based budgeting (ZBB) strategy.
Pitkethly explained, “This created a lot of wasted work, both internally and for our agencies. By working more closely and creatively, Unilever has found savings opportunities. This was done through the use of a wider set of production houses and some lower cost locations. This allowed the company to reduce average cost per film by 14%. On a global scale, the ZBB approach has helped the brand deliver more than €300million in savings.”
Zero-based budgeting and traditional budgeting are poles apart. ZBB requires the rationalisation of the annual budget from the bottom up, starting with a zero budget base, while traditional budgeting assumes the budget from the previous year as a default starting point, with the final amount based on an computation of revenue/sales projections.
We asked Unilever Malaysia Marketing Director Shiv Sahgal (picture) for his comments and how this will encourage better messaging for his brands, “Zero based budgeting allows us to allocate resources on projects and activities based on what is ideal to deliver the set objective instead of an iteration of what has historically been spent. This ensures that all key activities are adequately resourced and it eliminates inefficiencies in the system of over or under funding activities. Whether this leads to an increase or a reduction in the media and other such spends is just an outcome of the process and not the thought driver behind it.”