PepsiCo is to scrap its global marketing procurement team, shifting the emphasis for agency relations to its individual brand teams.
The soft drinks and snack maker is placing the onus on its marketing department for extracting the best value out of agency partners.
According to Ad Age, some of the “roughly dozen” staff employed in the firm’s marketing procurement department have been made redundant, while others have been placed elsewhere.
Procurement teams have long been unpopular with agencies, and this move appears to confirm that marketers are also beginning to question the effectiveness of this method.
Indeed, in the US earlier this year, an Association of National Advertisers survey reported that only 47% of clients believed procurement “added value”.
In a statement sent out to the media, PepsiCo said: “We continue to evolve our operating model to be more efficient and effective. These changes are made with careful consideration and are necessary for us to stay competitive while meeting the future needs of our business.
“Unfortunately, as a result of these changes, some positions have been impacted. These are never easy decisions but we are committed to supporting affected employees by offering severance packages and comprehensive career transition support.”
PepsiCo had not responded to requests for comment at the time of publishing.
The company has employed the services of Omnicom agencies such as TBWA/Chiat/Day, BBDO and OMD for its Pepsi brand. However, in January it opted to bypass Omnicom for the creation of a global ad campaign, instead using boutique New York agencies Lloyd&Co and Moondog.
Speaking at the Association of National Advertisers’ Masters of Marketing conference in Orlando last month, Bradley Jakeman, president of PepsiCo’s global beverage group, warned that the agency model is “not going to bend, it’s going to break”.
“Agencies will continue to see more and more projects leaving them. They will get a smaller and smaller share of the pie,” he added, according to a Wall Street Journal report.