Report: J.M. Smucker debuts new marketing model, consolidates agency relationships

Dive Brief:

J.M. Smucker, owner of Folgers, Jif and other consumer packaged goods brands, is shifting its marketing strategy, including moving its marketing staff to specific business units, where they can create more relevant ads more quickly. The company is also consolidating its agency relationships with Publicis Groupe, The Wall Street Journal reported.
The company moved 50 marketing team members from specific marketing divisions, including sponsorship and shopper marketing, to the coffee, pet food and snacks, and consumer food business units, with a new marketing lead for each unit. A central creative group will remain independent. Smucker said the new model will speed up the marketing process while helping the company gather insights from data and create content informed by data.
Smucker, which had been working with 12 agencies, is consolidating with a single ad holding company Publicis Groupe. Smucker previously worked with Interpublic Groupe’s FCB, WPP’s Grey, Dentsu’s Carat and others. Consolidating agencies is saving Smucker money, but the company has also increased its overall marketing budget to $580 million from $500 million.

Dive Insight:

Smucker shifting its marketing strategy is part of the company’s plans to drive growth and boost brand awareness among consumers who spend much of their time online. The company is hoping that simplifying its marketing structure will help internal teams and agencies work more efficiently and develop more relevant creative. For example, if Smucker wants one of its coffee brands to grab onto a cultural event or moment, a lead from the coffee group can be called out, whereas the company previously would have spent more time assembling people from different departments, according to the Journal.

Consumer packaged goods companies are rethinking their marketing strategies to save money, assume greater control over creative, embrace emerging technology and adapt to consumers' changing behaviors and expectations. P&G cut its marketing spend and saw sales increase while Unilever is bringing more marketing functions in house. CPG brands haven’t fared well of late, in part because millennials prefer fresh, natural food options and shop online more. Smucker has responded by becoming more innovative and agile in developing and marketing brands, including looking into mergers and acquisitions and using consumer insights and data for its brand-building initiatives. Smucker expects organic sales to grow 0% to 1% for the fiscal year, ending April 30, which is down from a previous forecast of 2% growth.

Ecommerce is another area where CPG brands are focusing their attention, as they try to meet the needs of online shoppers and develop direct relationships with customers so they can learn about them and optimize their marketing. As consumers spend more time online, they are also expressing a growing interest in grocery shopping online. By 2025, online grocery sales are expected to account for 20% of total grocery retail, reaching $100 billion in sales, according to a Food Marketing Institute study cited in a report from Forbes.

Agencies are also under pressure to modernize and adapt to emerging technology and consumers’ changing behaviors. A World Federation of Advertisers and The Observatory International study revealed that 74% of major multinational brands are reviewing their agency arrangements, with many marketers saying agencies struggle with technology.