The food behemoth is on a drive to create more efficiencies in its marketing plans. Concurrent with the North American effort, Kraft Foods International, formerly Kraft Jacob Suchard, is conducting a media review in Europe that will consolidate media buying and planning there. Media spending in Europe is estimated at $200 million.
A Kraft spokeswoman acknowledged that the company is currently meeting with its roster of agencies to review North American media buying practices.
'WHAT WE SHOULD BE DOING'
"We are reviewing the media landscape with our media agencies to determine how Kraft should adapt to the changing environment and to make sure we are adopting best practices," said a Kraft spokeswoman. When asked whether the review is intended to determine consolidation of media responsibilities at a single agency, she said, "This is really about what we should be doing, not who we should be doing it with."
However, an executive close to the company said that Kraft is indeed evaluating a media agency consolidation. According to Competitive Media Reporting, the food giant spent $759 million on measured media in the U.S. in 1999.
Currently, four of Kraft's core agencies -- J. Walter Thompson Co. and Leo Burnett Co. in Chicago, and Young & Rubicam and Ogilvy & Mather, both in New York -- handle media buying for the company. Burnett, through Media-Vest in Chicago and New York, handles national television buying and adult-targeted categories. Y&R's Media Edge does print buying and planning. WPP's MindShare maintains the national radio account, and Grey Global Group's Mediacom does spot buying and kids categories. The Kraft spokeswoman confirmed that they are talking to these shops as well as to True North Media, New York, and Omnicom Group's media arm OMD-Canada, with whom Kraft currently has relationships.
UNILEVER, P&G LEAD THE WAY
A Kraft consolidation would appear to follow the lead taken by competitors Unilever and Procter & Gamble Co., which currently are reshuffling their media decks. P&G is tinkering with the payment plan for its agencies and may shift marketing away from broadcast and into targeted media such as print, direct and Internet.
Unilever also is looking at its media options, and is expected to shift some advertising away from television into other media. Unilever also will restart its $515 million U.S. media review, expected to resume in July, according to an executive close to the company. That review is designed to consolidate media buying and planning at one agency. Interpublic Group of Cos.' Initiative Media, which recently purchased Botway, is vying against Omnicom's Optimum Media Direction and MindShare for the account.
Kraft also is re-evaluating its agency compensation scheme (AA, June 12) and its media mix, and is now considering an agency consolidation in order to create leverage in the marketplace.
Kraft has long been able to drive efficiencies for its media-buying process by funneling media buys for the entire company through its internal media department. That department then sells the media to individual brand groups. Presumably, the current review would serve to make that process even more efficient.
Kraft Foods International in Europe is working with Nick Shepherd, a consultant based in the U.K., to conduct the review. "They have nine different agencies in Europe, so they are trying to do one European consolidation," said an executive close to the review.