Johnson & Johnson just reorganized its consumer business to be more agile. Now it wants agencies to follow suit.
The giant marketer, with aspirations to run more like a startup, has launched a review aimed at streamlining its agency lineup. The effort doesn't involve a request for proposal and isn't expected to result in changes to primary creative-agency assignments for brands, which will remain with Omnicom and WPP, says Alison Lewis, chief marketing officer of J&J Consumer Cos. But it's designed to streamline agency teams along the lines of what J&J has done in the U.S. with its consumer business, recently reorganized into 10 leaner, multidisciplinary "squads" organized around such consumer needs as pain relief or oral care.
Of those "squads," modeled on the organization of tech and financial-services companies, Omnicom shops lead creative services at six and WPP units lead four.
"Startups are flatter organizations that get things done across different functional groups," Lewis says. "We're trying to create a less matrixed organization" and want agencies to match that.
J&J is of course a long way from a startup. The consumer business had sales of $13.3 billion last year. It accounts for a relatively small slice of the larger healthcare parent's $73 billion in revenue but the vast majority of its $2.4 billion in reported global marketing spending. Company veterans describe it as bureaucratic and process-driven. But it's also looking to change.
The review doesn't include media planning and buying, now handled by Interpublic's J3 in the U.S. Omnicom and WPP, which presented initial proposals last week, both followed instructions to include how they would work with J3, designated as the first of possibly more "power partners" outside Omnicom and WPP that will be involved in the new model, says Lewis.
More likely to change is the lineup of digital, social, shopper and public relations specialty shops involved with J&J brands, which may be consolidated and or restructured to eliminate staffing duplication, such as multiple account managers working on J&J.
"We may not end up with an agency that does it all end to end," says Jeff Smith, group chairman of J&J Consumer for North America. "But on some of my squads I have 20-plus agencies who touch the brands over a year. Somebody's doing social, somebody digital, somebody is managing the 6-second spots on Facebook but someone else doing TV video. If my squads are going to operate in a more agile, entrepreneurial way, they can't really manage 20-plus touch points."
Lewis says cost reduction may result, but it's not the primary driver of the effort. "The number one priority is we're looking to drive more growth," she says.
J&J Consumer sales grew a sluggish 1.1 percent last quarter excluding effects of currency, acquisitions and divestitures, behind many global peers and below the companywide 3.8-percent organic sales growth.
J&J hopes to put a new agency system in place early next year in the U.S., then begin re-applying the model to operations globally. While the company isn't necessarily looking to match the agency models used by any other marketer, Lewis says it is looking to the McDonald's agency model developed with DDB and Omnicom for inspiration, as well as approaches used by other global marketers.
Beyond the holding companies, J&J also is looking to develop in-house creative and production studios to handle relatively simple, quick-turnaround content such as Instagram posts, Lewis says. This is similar to the U Studios that Unilever introduced last year, but was inspired more directly by what Smith found OGX and other Vogue International brands doing when they were acquired last year.
"'Studio' makes it sound a bit more glamorous than they are," Smith says. "It's a small room with a glass door and a nice camera. Daily they're doing multiple Instagram and social posts. We've been learning from that. They're ridiculously simple to operate. We've been relying on agencies to do this work because we felt like a phone call was easier than just having the artist on site who could just run a camera for you. You can go see some of these things at agencies, that are overbuilt and can almost shoot a movie for you, and that's really not what you need."