Why ABInBev Scuttled 'Underutilized' Shops

NEW YORK Anheuser-Busch InBev's elimination of longtime A-B roster agencies such as Goodby, Silverstein & Partners is but the latest sign of a cultural sea change taking place at the world's largest brewer. As the year unfolds, sources expect additional roster pruning -- Hill, Holliday was also recently let go -- and more competition among existing shops in the form of "jump balls" for campaign assignments.Asked to explain the roster cuts, ABInBev vp of marketing Keith Levy said the brewer was moving from a "bullpen approach" to one where each agency has a primary brand responsibility. The latest tack "establishes higher accountability, ownership and performance requirements for the work being managed by these shops," Levy told Adweek last week. "This allows our company to redirect budgets that were tied to underutilized agencies and associated retainer fees to other areas of our business."Gone are the days of a marketing-driven Midwestern company that was steadfastly loyal to a set roster of agencies that expanded at times to increase creative options. In its place is a cost-conscious operation that embraces the concept of zero-based budgeting, which requires a justification for every dollar spent, regardless of past budget history, said sources."InBev is a very cost-conscious company worldwide," said a source. "They're also very ... test-driven culturally. They're moving into the direction of a consumer packaged-goods company."The ZBB approach to planning and management has been part of the Belgium-based InBev's culture for years and took root in 2006 when it spread to South Korea and Central and Eastern Europe, after being implemented in Western Europe and North America, according to InBev's 2006 annual report. In a section titled, "World Class Efficiency," InBev wrote that ZBB "delivers that crucial first step in the cost-connect-win process, enabling us to capture savings from our fixed cost base which can be used to connect with consumers and drive top-line results."In that context, this year's layoff of thousands of A-B staffers; the February letter to media owners saying that the company will now pay its media bills within 120 days instead of the standard 30; the cash-outs of veteran marketing executives Bob Lachky and Tony Ponturo; and the shedding of shops seems logical. That said, the speed of such cost-saving moves has taken some by surprise. InBev closed its $52.5 billion acquisition of A-B in November.Last month's departure of Lachky, A-B's chief creative officer and a 20-year veteran of the company, represents the loss of a key advocate for agencies, particularly those that A-B has hired in recent years, such as Interpublic Group's Deutsch here in 2008 and Havas' Euro RSCG in Chicago in 2005, said sources. Euro RSCG works primarily on Michelob but also has contributed to Bud Light's "drinkability" campaign, along with Omnicom Group's DDB in Chicago. Deutsch is said to be working on various assignments but its work has yet to hit market. Sources said that both shops remain on the roster and weren't affected by the recent wave of pruning.Ponturo's December exit raised questions among observers about ABInBev's in-house media operation. Ponturo oversaw media as vp of global media and sports sponsorships. His duties have been absorbed by his No. 2, Dan McHugh, vp of media, sponsorship and activation. Some sources now wonder if ABInBev, which spends about $1 billion globally each year in major measured media, will look to outsource media duties, thereby putting business into play.But when asked about media, Levy said that Busch Media Group "will continue to serve our media planning and buying needs. The efficiencies achieved through BMG allow us to operate our media buying activities at a cost that is below market rate."

Brand Marketing

Why ABInBev Scuttled 'Underutilized' Shops

Eleftheria Parpis

Andrew McMains

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Eleftheria Parpis

Andrew McMains