Monday, March 29, 2010

L'Oreal: Is Their Spend Really Worth It?

L'Oreal is known for its famous tagline 'because you're worth it' to consumers. But taking a step back and reviewing the amount of media and marketing dollars they put behind their consumer product campaigns each year, 'because you're worth it' should be asked when reviewing their spend with their advertising and media buying agencies.  L'Oreal announced that they are "evaluating" its U.S. media buying -- a process that could result in a consolidation or shifts in the company's agency roster, according to sources.

L'Oreal spent $710 million in U.S. measured media last year, up from $660 million in 2008, according to Nielsen. Those figures do not include digital spending.

Interpublic Group's Universal McCann and Publicis Groupe's Zenith Optimedia share the buying assignment.

Multiple sources at IPG and Publicis indicated that both incumbents are participating in the current evaluation, which does not appear to include non-roster shops -- for now. Neither UM nor Zenith officials responded to calls seeking comment. L'Oreal executives and reps didn't immediately return calls.

L'Oreal markets dozens of brands including L'Oreal, Maybelline, Garnier, Kiehl's and The Body Shop.

The company reported worldwide sales of $23.3 billion for 2008, the latest figure available.

The cosmetics category has seen a lot of recent review activity. Last week, Coty opted to retain OMD (agency) after a pitch that lasted more than a year. In February, Revlon shifted its $100 million-plus assignment from Aegis Group's Carat to WPP's MediaCom.

I am seeing more and more of the big FMCG brands shifting to less glamorous and more affordable agencies. Also, more and more marketers are seeing the importance of word of mouth and social networking as key drivers in annual campaigns ROI.

Watch this space!


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