What you need to know:

• Westpac planning major redundancies across marketing department amid massive cost cuts.
• Up to 90 roles under review, though bank insists no final decision taken.
• Cuts come as rivals increase pressure and marketing spend.
• Industry observers suggest if full time employees pushed off books, agencies will gain.

Profit margin

Westpac is to make significant cuts to its marketing function as part of an $8bn cost reduction programme.

The bank is expected to axe up to 90 marketing roles, with staff informed yesterday.

News of Westpac’s departmental cuts come three months after Annabel Fribence joined as CMO, leaving KFC to lead marketing at the bank.

A marketer swapping a career in food and beverage to take on finance may not have expected additional headwinds when approached for the role.

Yet while the impact on Westpac's broader marketing supply chain is yet to materialise, industry observers suggest that agencies could gain as the bank drops full time staff in favour of off the books outsourced services.

Limiting factor

Westpac aims to reduce costs by 20 per cent on FY21 levels, or roughly $8bn, by FY24. It slashed more than 1,000 jobs last quarter with a similar level expected in the current quarter.

Since announcing its cost-cutting plan on 3 Feb, Westpac’s share price has climbed 10 per cent. But the marketing shakeout may yet see the bank fall further behind rivals investing heavily in marketing resource, such as ANZ and CommBank. The former is investing significantly in future-proofing its 300 marketing staff while the latter is making big strategic and technology bets in a bid to ward off threats from global platforms, gaining consent from customers to market adjacent services to them that it part-owns, while gathering ever more first and zero party data.

Westpac is also working through increasing permissions to cross-sell services to customers after ASIC’s Design and Distribution Obligations (DDO), which kicked in last October, placed significant restrictions on banks around consent. DDO means banks now must know who their intended customers are before targeting them for any given product – with fines for institutions that fall foul. Westpac is grappling with how to move faster in that area.

Flexible demeanour

How the broader cost-cutting programme may affect investments across digital transformation, customer experience, personalisation and Westpac’s circa $65m advertising budget now managed by Publicis remain to be seen.

But some industry observers think the media and marketing supply chain will gain in the short-term. They argue as the bank moves headcount costs off the books, agencies will gain.

"The impact [on advertising and external marketing] is likely to be minimal. What you tend to see with these kind of rationalisations is increased outsourcing to agencies... because it removes FTEs [full time employees]," said one agency boss. "When the profits are good, banks employ people. When the share price is under pressure, unfortunately for the marketing team in this case, they take people out."

Westpac is not the only blue chip making major redundancies. Telstra last year made cuts to its marketing department as part of a broader 1,400 job cull as part of a four-year programme to save $1bn, with 8,000 jobs affected in total. Those cuts resulted in "short-term pain" as remaining staff adjusted to more agile methodologies, according to one agency exec with knowledge of Telstra's business, but resulted in "flatter, less hierarchical structures." Media and marketing supply chain arrangements and investments, they suggested, were largely unaffected.

Westpac declined to comment on the number of affected jobs but confirmed a marketing shakeup is underway.

“We are taking steps to simplify our business and create a more centralised brand and marketing model," Chief Brand and Marketing Officer, Annabel Fribence told Mi3 via written statement.

"We are consulting with our people on these changes and no final decisions have been made. We will support impacted employees throughout this process, including with redeployment opportunities.”