Overview

Royal Philips is a global leader in health technology, headquartered in the Netherlands. With a legacy of innovation, Philips is dedicated to improving people’s health and well-being through meaningful innovation in healthcare, personal health, and connected care solutions. The company focuses on delivering integrated products and services that advance patient outcomes, enhance experiences, and improve operational efficiency. By leveraging technology and deep clinical expertise, Philips empowers healthcare providers and individuals to achieve better health outcomes and a more sustainable future.

The Challenge

Amid the global disruption caused by COVID-19, Philips faced an urgent need to pivot its marketing strategy from traditional channels to a fully digital-first approach. This transformation required not only accelerating online brand presence and sales but also rethinking its global sourcing model. With over €600M in annual marketing OpEx across multiple major agency partners—including WPP, Dentsu, and Omnicom—the organisation was under pressure to improve performance, reduce costs, and resolve long-standing inefficiencies. The complexity was heightened by fragmented agency contracts, inconsistent KPIs, and emerging concerns around financial transparency and compliance, creating a need for commercial clarity, enhanced governance, and rapid value creation.

Approach

To address these challenges, Philips adopted a comprehensive and structured commercial transformation strategy focused on three key areas:

1. Strategic Review & Value Assessment

   A full audit of historical commercial outcomes and agency relationships was conducted across the €600M global marketing spend. This detailed assessment helped surface inefficiencies and underperformance, laying the groundwork for renegotiation and restructuring.

2. Global Tender & Vendor Consolidation

   Philips launched a rigorous RFP and nine-month agency selection process to consolidate spend, standardise performance expectations, and elevate service levels. This culminated in a €500M, four-year global agreement with Omnicom, streamlining vendor management and replacing fragmented relationships with a unified performance-driven model.

3. Commercial Governance & Risk Mitigation

   When account irregularities with a major agency partner were identified, Philips engaged a Big Four firm to conduct a forensic audit. This led to the successful recovery of over €10M through legal settlement and reinforced commercial governance controls across all strategic partnerships.

Results

Philips’ strategic sourcing transformation delivered measurable results across financial, operational, and governance dimensions. The company achieved €50M in cost savings on its €600M annual marketing OpEx by renegotiating agency partnerships and eliminating inefficiencies. A major global tender led to the award of a €500M, four-year agreement with Omnicom, which improved service quality and addressed legacy issues across global marketing operations. Additionally, Philips successfully recovered over €10M through a legal settlement after uncovering financial irregularities with a key partner, reinforcing transparency and strengthening commercial controls. These outcomes significantly improved return on marketing investment and positioned Philips for sustainable digital growth.