Last March, Johnson & Johnson asked WPP and Omnicom to grab talent from their agencies and create integrated teams dedicated to serving J&J’s consumer efforts. WPP called its Neighborhood and Omnicom’s was christened Velocity. Neighborhood drew staffers from BCW and Ogilvy, among other shops, while Velocity drafted talent from FleishmanHillard and Marina Maher Communications, according to J&J EVP of global corporate affairs and chief communications officer Michael Sneed.
A little over a year later, J&J is reportedly planning to cut its marketing budget and the holding companies are trimming staff from their teams in response. Sneed confirmed that the cuts are real on the advertising side, at least. He didn’t offer numbers, but last year, research firm Kantar reported that J&J’s earned media spend dropped to $943.7 million from $1.1 billion in 2017.
A spokesperson said FleishmanHillard staffers have not been affected by the cuts. BCW declined to comment and referred questions to J&J. Ogilvy and Marina Maher did not comment on the reports.
Outside the consumer teams, Sneed said the PR budget is stable. "There have been no decisions made," he said, "but we feel comfortable with the overall level of support."
Sneed said J&J works with dozens of PR agencies, noting that WPP’s BCW is "an important agency for us" and Omnicom’s Porter Novelli, Marina Maher and Ketchum are "critical partners for our brands and companies."
PRWeek caught up with Sneed about his company’s relationships with PR agencies both inside and outside of the Neighborhood and Velocity teams.
Can you characterize the budget cuts?
I can’t, to be honest. What I can say is that I think that Thibaut Mongon, EVP and worldwide chair of consumer, and the whole consumer leadership team are very focused on what are the parameters that are working the most to drive growth and then are allocating the funding to those types of [strategies]. What that results in, in terms of overall budgets, I can’t say.
What I would say though, is from a strictly PR and comms perspective, I don’t think we will see the kind of transitions or changes we’re seeing on the advertising side, and I do think the consumer group is very committed to earned media as a way of driving our growth.
Can you describe your relationship with non-consumer PR firms? Is it a holding-company-wide approach like the Neighborhood and Velocity teams?
At J&J, we partner with dozens of PR agencies, and like we’ve done on the ad side, over time we have tried to move more work into the holding company agencies. But PR is not as consolidated, and while we have a lot of great partnerships within the holding company agencies, we also have strong relationships with agencies outside the holding companies.
Structurally, are you changing your relationship with the Neighborhood and Velocity teams?
To my understanding, that’s not going to be the case. We are pleased at the approach of the Neighborhood and Velocity teams and have taken a similar approach in the consumer group here in using and developing squads of multidisciplinary groups of marketers who are all collecated together to manage and run that part of the business. I think the model presently is strong.
What about your comms efforts outside of consumer?
It’s certainly my belief, when I look at the holding companies, that I find a tremendous amount of capability. Generally speaking, we want to take advantage of the capabilities the holding companies can afford us. At the same time, we have other agencies that are independent that are also bringing a lot of capabilities along.
The business seems to be moving away from AOR relationships to project-based work. Some companies keep a stable of agencies they choose from for projects on an a la carte basis. What do you think of that model?
We certainly operate on a year-to-year basis with our agencies and certainly, some [relationships] are project-related, but I would say we are constantly reviewing the agencies we are working with, and not reviewing as in ‘should we be using them or not?’ but as in ‘what is the work like and is the relationship right?’
We put a high premium on two things. First and foremost, are we seeing exceptional work? And do we have the best people in the business? And secondly, is the relationship a healthy one?
We really believe when it comes to our relationship with agencies, it’s a two-way street. We owe our agencies the best people from J&J to work with, and they owe us the same. We are always encouraging our agencies to get better, and that’s an ongoing discussion.
We do have long-term relationships with agencies, but first and foremost, it’s based on the performance, and over time that performance has been pretty good. In cases where performance has not been good, we work with the agencies to improve performance through regular discussions and if performance is not where it needs to be over time, then we seek other alternatives.