Advertisement

Why ABInBev Scuttled 'Underutilized' Shops

Advertisement

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."

Continue to next page →