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Unilever to spend less money on creating ads, but more on showing them

In an earnings call with investors, Unilever chief financial officer Graeme Pitkethly revealed that brand health measure remains “very strong”. However, there is a change in approach for the company which is spending more competitively than it was the year before. This is done in a more effective manner because zero-based budgeting (ZBB) allows it to put more of its investment back and cut waste out.

“We have much more consumer media and promotional point of sale investment as part of that mix and less on non working media,” he said, adding:

Less money is being spent creating advertising and more money is being spent showing advertising in a more effective way to our consumers.

Meanwhile, in July this year following its Q2 results, Unilever said its analysis found that it was producing too many “new” pieces of advertising, with more than 95% of its advertising films being replaced before it had reached maximum effectiveness. Pitkethly added that a result of this was the creation of “a lot of wasted work”, both internally and for Unilever’s agencies.

Unilever had then revealed that it was able to reduce its media spend in Southeast Asia by 12%. This was through its new zero-based budgeting (ZBB) strategy and follows the company’s move to tighten its disciplines around media planning. Using the Southeast Asia market as an example, Pitkethly had then explained there was a tendency for Unilever to expose consumers to its advertising “beyond the point of diminishing returns”. Through ZBB, Unilever was able to focus on the quality of its advertising reach.

This time around, Pitkethly explained that overall Unilever is making the right changes within its businesses through the various organisational changes and reshaping of its portfolio. He said this is the “more strategic response to the changes taking place within the consumer communications landscape”.

“I don’t need to tell you that there is a lot of change and influx [in the new consumer landscape]. If you get it right, you get it very right, if you get it wrong, you get it very wrong,” Pitkethly added.

Some initiatives the company is continuing to undertake include its Unilever Studios which builds its in-house digital and content capabilities which is now available in over 20 marketers.

Another is Unilever’s people data centres which allows it to secure consumer insights from social and scraping data from around the digital landscape. These centres are now in 20 markets, covering 40 languages. Pitkethly said:

All we can do is continue investing heavily in building capabilities in the new marketing space. As such, around a third of our investment, which may be the wrong distinction here, is on ‘digital’.

Addressing other capabilities such as programmatic, Pitkethly acknowledged ongoing efforts by CMO Keith Weed, along with the rest of the industry, in creating proper stewardships and leadership roles and basics such as viewability, verification, combating ad fraud and brand safety.

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