UNILEVER GOING ON A DIET: Yesterday Unilever also made news with the announcement that it planned to trim $8.2B from its worldwide marketing budget during the next fiscal year. This is being caused by two reasons. First is a reaction to the recent acquisition attempt by Kraft Heinz, whose business model is to absorb bloated CPGs and make money through operational costs savings via a process called “Zero-Based Budgeting”. Unilever successfully rebutted Kraft Heinz’s takeover bid, but now is under shareholder pressure to cut expenses. The second issue is the overall state of CPG. The entire sector is only growing by 2-3% per year which is primarily due to market saturation. Besides the overall state of Unilever and the CPG category, I thought the attached Bloomberg article was interesting because it shows the % of revenue coming from the major product categories for the four holding companies plus Havas. I’ve never seen agency revenue broken out this way. Given how important CPG is to these agency portfolios, any spending cutback in this category could have a ripple effect across the entire media industry.
STREAMING TAKES OVER THE MUSIC INDUSTRY . . . BY THE NUMBERS: Over the past few weeks there have been a ton of numbers floating around about the continuing surge of audio streaming and the effect it’s having on the US Music Industry. The research firm BuzzAngle has aggregated the Q1’17 numbers across the different distribution channels to show the relative scale of each. I’ve highlighted the three numbers that really matter in the chart below. During Q1’17 there were 36.2M albums sold, 161.2M songs purchased via download and 83.6B songs streamed. Or to put it another way . . . for every song downloaded there were 518 songs streamed, and for every album sold there were 2,309 songs streamed. While referencing these numbers during their Q1 Music Report, even always-pro-radio Nielsen was quoted as saying “It’s clear that streaming is taking over.” I’d say that’s the understatement of the year!
Have a great Tuesday guys!
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