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Annual Unilever Appraisals Could Result In Changes

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Top Unilever executives sat down with chiefs from their roster shops and respective holding companies on Friday to discuss issues related to the annual brand-by-brand appraisals they received earlier this month. The meetings are nothing new for the Anglo-Dutch packaged-goods giant, but more is at stake this year, given Unilever's business pressures and the lackluster performance of some of its shops.

Additional meetings are scheduled in the next two months, and the client has yet to play its hand. Some sources expect brand assignments to shift as a result of this year's drill. Others wonder if Unilever will go further and trim its roster. But it's anything but business as usual at Unilever, which is increasingly focusing on core global brands to drive growth as some industry analysts urge the company to sell off less profitable pieces of its portfolio.

"Unilever has been becalmed for a long time. I think that they're looking to get their groove back," said one roster shop executive. "Unilever needs their brands to perform and for their brands to be compelling," which "brings more edge to these discussions," the source added.

Said another: "I think there'll be a more even distribution" of business as a result of the meetings. Going in, however, the source did not know how quickly changes may occur.

Unilever employs six lead creative agencies from four holding companies: Interpublic Group (Lowe, McCann Erickson), WPP (Ogilvy & Mather, JWT), Omnicom (DDB) and Bartle Bogle Hegarty, 49 percent owned by Publicis Groupe. Sources said the favorite sons right now are BBH, which handles about a dozen brands globally, including Omo, Axe and Vaseline, and Ogilvy, whose "Campaign for real beauty" for Dove is seen as a model for integrated communications.

Considered vulnerable are JWT, with whom the client has creative issues, and Lowe, whose stability is in question, per sources. In the past year, JWT has lost Ragú and pieces of Vaseline, Omo and oral care brands overseas, despite pitch opportunities to grow share. Lowe, meanwhile, has lost its lead on Omo to BBH—though it kept business in four markets—and added oral care brands at the expense of JWT and Ogilvy. Still, the shop, which also handles Degree, Lynx and Cif, has had three CEOs in two years and is trying to reinvent itself on the fly.

McCann, like JWT, is working to upgrade its creative, and it has shown signs of improvement in recent months. The bulk of McCann's business, however, is ice cream (Magnum, Cornetto, Carte D'Or), a product that some analysts want Unilever to shed. In the middle of the pack, said sources, is DDB, which chiefly handles Lipton and Knorr. In March, the shop sought to improve its standing by hiring Asit Mehra, an 18-year Unilever account veteran.

Unilever is the No. 1 client by revenue at BBH and Lowe and a Top 3 client at JWT and Ogilvy. The business at McCann and DDB represents less than 5 percent of each shop's total worldwide revenue, said sources.

Friday's meetings came after a day of brand exercises and a dinner, where Unilever CEO Patrick Cescau handed out awards by medium and effectiveness. (McCann, Lowe, JWT, Ogilvy and BBH all received at least one, whereas DDB came away empty-handed, sources said.) Each agency got an hour to meet with about 10 client executives, including global CMO Simon Clift and leaders from the foods, home and personal care divisions. About two weeks earlier, Unilever had distributed its assessments, which scored the performance of each shop, brand by brand, on a scale of 1 to 7, according to sources. Unilever wanted to hear how the shops planned to improve their results.

A handful of top suits from each shop attended, in tandem with their holding company bosses. Lowe's group, for example, included worldwide CEO Stephen Gatfield and IPG CEO Michael Roth. McCann, however, had to reschedule its meeting, after CEO John Dooner contracted the flu. Agency executives and Unilever declined comment.