While consulting firms are usually eyed as the most clear and present danger to agencies, don’t sleep on scrappy startup tech firms.
Unilever, one of the world’s largest marketers, is briefing startups on the tasks previously handled by the agencies it has axed in recent months as part of its ongoing efforts to limit agency and production fees.
The advertiser slashed its spend on agencies by 17 percent in the first half of 2017, while simultaneously making more moves to get closer to entrepreneurs. Over the last six months, it has launched co-working spaces in Singapore and Ireland where its marketers can sit beside up to 50 startups, with plans to erect more throughout the U.S., Europe and Asia. In these hubs, both Unilever’s marketers and startups work on live briefs, while the latter also have access to networking opportunities such as fireside chats and mentoring programs.
By cozying up to startups in these spaces, Unilever plans to give startups like user-generated-content platform Vidsy and influencer marketing technology Mavrck more of its marketing budget. Startups are already taking on more of tasks such as customer research, content production and social listening, which Unilever’s defunct agencies once handled, according to Aline Santos, evp of global marketing. It’s left some of Unilever’s traditional agencies in a precarious position at a time when Santos and her team are cutting half of the 3,000 agencies they use around the world and are making 30 percent fewer ads.
The cutbacks were triggered by Kraft Heinz’s failed bid to acquire Unilever in February, after which Unilever pledged to create greater shareholder value.
“Because the traditional agency model is under huge pressure, possibly even bigger than the challenge corporations have today, those companies have to reinvent themselves quickly, as [the things they do] can be done in a much simpler and cheaper way that’s much more authentic,” said Santos. “My question to the traditional agencies is, what are you doing about it?”
Agencies will need to be quick however they respond, as Unilever hastens its own efforts to address the strange, sometimes awkward relationships between itself and startups. Since it launched the startup accelerator Foundry in 2014, Unilever has shortened payment times for those businesses and introduced a bespoke procurement process for them after seeing its earlier efforts to scale those relationships stutter.