Unilever generated savings in brand and marketing investment of over €500 million for the whole of last year. According to the Unilever Annual Report and Accounts 2018, this was done by focusing on maximising returns, where Unilever increased expenditure on areas there were driving growth, such as digital media and in-store, whilst reducing spend on production and promotions.
Additionally, the FMCG company made strides in creating more content in-house through its team U-Studios and making its existing assets go further last year. The report said that its U-Studios in 13 countries created brand content “faster and more efficiently” than external agencies. “Improvements to measurement and verification of digital audiences ensure we maximise value in digital advertising alongside improvements in the measurement of influencer follower data,” the report added.
Nonetheless, the consumer goods giant is expecting challenges ahead as the business evolves at a faster pace. With the rise of digital technologies, Unilever said in the report that traditional understanding and engagement with consumers will be redefined.
The talkability of brands is vital in a fragmented digital media landscape, favouring those with a strong point of view, or purpose, relevant to consumers.
“Consumers are taking different paths to purchase, often combining offline and online channels where influencers are a growing force. Younger consumers continue to prioritise meaning over materialism and are demanding more authenticity, transparency and natural ingredients,” said the report. As global workforce and middle class consumers rise, especially in emerging markets, Unilever is also seeing more demand in greater convenience and time savings. More targeted and data-driven marketing is therefore needed to fit changing customer profiles and preferences, it added.
Meanwhile, the proliferation of digital and social media channels has resulted in media fragmentation, with digital advertising now about 40% of the market. Channels to reach customers are also impacted as a result. For example, direct-to-consumer models and platforms such as Amazon and Alibaba have led to less reliance on “big box” retailers. As such, improving standards and tackling fraud to protect the integrity of digital marketing are some of the major challenges ahead.
Unilever added that it reorganised into three divisions – beauty and personal care, foods and refreshment and home care to “meet changing trends more effectively”. “A global, digital economy is fuelling rapid change characterised by fragmentation throughout the value chain. This requires fast, innovative, profitable global and local responses in areas such as supply chain, customer development, marketing and brand innovation,” the report added.
In 2017, Unilever also saved approximately US$700 million from production costs by producing fewer ads and relegating more work in-house. It allocated about US$300 million of its productions savings in 2017 to media and in-store marketing. Under CMO Keith Weed’s leadership, the company also refused to work with influencers who buy followers, in an effort to push for greater transparency in the influencer marketing space to combat fraud in the digital ecosystem and create better experiences for consumers. Weed will be retiring from his role in April after 35 years with the company.