At brands such as PepsiCo, Mondelēz International and MasterCard, perceptions of marketing are starting to shift from being a cost centre to a revenue generator. Traditionally, marketers have justified their spending on media, ads and promotions by pointing to an uplift in brand awareness, sentiment or sales at some point later down the line.
While these metrics continue to hold true, marketers are under mounting pressure to show that they can also generate revenues quickly and directly from their own in-house resources.
This trend is driven by several factors: a need for marketers to justify their worth in the boardroom, the desire to bolster budgets with extra cash and the rising prominence of ‘content’ as a marketing discipline. As brands struggle to reach consumers on digital platforms with traditional advertising – a problem exacerbated by the growth of ad blocking – their content operations serve the dual purpose of supporting their marketing needs while offering new revenue sources.
Selling white-label content
PepsiCo is one of the brands leading the way. In May, the FMCG giant launched the Creators League: a 4,000-square foot content studio in New York complete with a recording studio, screening room and editing and production facilities. The studio allows PepsiCo to create content in-house for its own brands, as well as white-label content that it can sell to distributors or advertisers for a profit. The aim is for PepsiCo’s brands to fund their own marketing spend through these additional, unbranded projects.
The Creators League already has a number of these deals in place, including one with AOL’s Partner Studio to create content around music, pop culture and health and wellbeing for distribution on AOL and Microsoft media platforms. The studio also has a development deal with production company The Firm and hip-hop artist T.I. to make a feature film, and recently worked on a promotional video to support the first-ever United State of Women summit in Washington DC, which featured First Lady Michelle Obama, Meryl Streep and Oprah Winfrey.
“Creators League allows us to leverage the power of our brands and their equities to essentially fund their own marketing.”
Kristin Patrick, senior VP of global brand development, PepsiCo
PepsiCo’s marketing department is directly responsible for the Creators League and the revenues it generates. Senior vice-president of global brand development Kristin Patrick heads up the studio, which employs a dozen full-time employees including engineers, editors and producers and adds further staff when necessary for bigger projects. Patrick states that the Creators League is available to all of PepsiCo’s brands to create content as needed, as well as to the wider creative community for white-label content.
“PepsiCo has massive brands, from Doritos to Gatorade to Mountain Dew, that all have value beyond what is in the bag or bottle, and Creators League allows us to foster deeper connections with consumers and to provide content with maximum speed, efficiency and creative control,” she says.
“As our internal production arm for scripted series, films, music recordings, reality shows and other content, Creators League also allows us to leverage the power of our brands and their equities to essentially fund their own marketing.”
Making media investments profitable
PepsiCo is not alone in attempting to turn marketing into a directly accountable revenue generator. In May, food and drink group Mondelēz International revealed details of its new marketing strategy that include plans for up to 10% of its global media investments to break even or turn a profit by 2020. Similar to PepsiCo, the company has agreed a number of content partnerships across film, television and digital channels to achieve this, including a deal with publisher BuzzFeed to co-create a new online platform focused on wellbeing. Mondelēz is also planning a suite of branded games that it hopes will be commercially viable over the next 18 months.
Speaking to Marketing Week, Mondelēz’s global head of content and media monetisation Laura Henderson said the strategy was driven by the challenge of reaching consumers with traditional advertising in an increasingly fragmented media landscape. Attempting to monetise Mondelēz’s content by selling it to distributors or advertisers would hold the company to “a higher bar where we’re actually focusing on really strong content that adds value and utility to the audience”, she added.
Meanwhile, MasterCard CMO Raja Rajamannar spoke at the Cannes Lions festival in June about how the payment brand is shifting its marketing away from “warm, fuzzy” advertising in favour of real-time promotions that allow the company to identify commercial opportunities at speed. This includes a promotion in India around the film Mary Kom, which was generating positive discussions on social media. MasterCard claims that by quickly agreeing a tie-up with the film’s distributor, it was able to drive both audience numbers and use of MasterCards through its promotion.
This focus on revenue generation is an example of “strategic marketing evolving itself to keep pace with change”, says the Chartered Institute of Marketing’s CEO Chris Daly. He argues marketing is increasingly seen as a crucial component to delivering business strategies – rather than just communications – and that it should “be locked into all business revenue generating activities”.
“True marketing is the linchpin between the business strategy and the marcoms strategy,” he says. “We have always regarded marketing as a revenue generator, so for us it’s really exciting that businesses are recognising that and putting it into practice.”
By granting marketing this central, strategic role, Daly suggests businesses can identify revenue opportunities at greater speed. “We are seeing brands meeting the changing habits of their customers,” he says. “While there has been a rise in ad blocking among consumers, there has also been a huge uplift in social media activity and of people watching films and programmes [online].”
Brands invest in owned channels
The idea of brands as content creators is nothing new. FMCG groups such as Procter & Gamble were famously involved in the production of the earliest soap operas (named in honour of the detergents these companies sold) as they sought to create captive TV audiences they could advertise their products to during commercial breaks. Moves by the likes of PepsiCo and Mondelēz to produce their own content could be seen in a similar vein, albeit with innovation in content formats and new channels for delivery and distribution.
“True marketing is the linchpin between the business strategy and the marcoms strategy,”
Chris Daly, CEO, Chartered Institute of Marketing
‘Over-the-top’ (OTT) video on apps or websites could similarly allow a wide range of consumer brands such as retailers or car makers to make money directly from video advertising or even paid-for subscriptions, depending on the content they produce. Video publisher Ooyala, owned by Australian telecommunications group Telstra, is providing OTT video services to a number of consumer-facing brands, but states that it is too early to disclose the projects.
Rags Gupta, general manager for EMEA at Ooyala, says: “In the age of social media and the splintering of consumer attention, marketers need to augment their paid media with earned media, which the production of their own content enables. This has historical precedent in soap operas and we expect to continue to see further investment in content production by brands.”
Meanwhile, in-house and customer magazines published by or for brands are becoming more sophisticated in their execution – and hence more effective at generating cash as well as brand awareness. Last month, Swiss jewellery maker Swarovski relaunched its biannual glossy print magazine Salt through a partnership with Condé Nast Contract Publishing. The magazine, which has a circulation of 25,000, is available on select newsstands in English, Mandarin and Japanese editions, allowing Swarovski to hit key target markets for its products.
The publication, first launched in 2010, is ostensibly driven with marketing goals in mind. According to Condé Nast, Salt’s editorial covers “fashion, design, jewellery and style inspired by Swarovski, their partners and their collaborations worldwide”. The magazine also generates its own revenue to offset the cost of producing it, boasting a cover price of £5.99 and carrying adverts from other “high-end fashion and design brands”. The magazine’s rate card states that a single-page ad costs £6,000, while the outside back cover is sold for £11,000.
Salt editor-in-chief Darius Sanai says the relaunch aims to “dazzle readers even more with the spirit and breadth of the Swarovski brand, as interpreted by Condé Nast editors, creatives and writers”.
An evolving skill set
Chris Daly at the CIM believes that as brands increasingly look to their marketing teams to develop content they can monetise, marketers’ skills will have to evolve. “We will see a new set of specialists appearing focused on content marketing,” he says. “Content marketing can’t exist on its own – it’s part of an overall jigsaw – but we will see marketers being more aware of the importance of content marketing, and also recognising that this is yet another skill set that they need to at least consider when putting together their marketing strategy.”
Red Bull remains one of the best examples of a brand that has built up its content production capabilities. Although an energy drink brand first and foremost, Red Bull has also become a media business in its own right over the past decade, producing films, TV programmes, online content and a print magazine around topic areas such as sport, culture and lifestyle. This includes drawing on the brand’s own sports properties such as the Red Bull Formula One racing team and a host of Red Bull extreme sport events.
The launch of Red Bull Media House in 2007 formalised Red Bull’s content offerings, creating a standalone business that serves both to market the Red Bull brand and energy drink and to create a diverse stream of revenues for the business. This continues to grow in 2016 thanks to a range of strategic partnerships, including a deal with Reuters, announced in March, that involves Red Bull making its sports and lifestyle content available to users of the Reuters Media Express newswire.
“The demand for sport and lifestyle content continues to rise, however many publishers lack the time or resources to produce or license it themselves.”
Red Bull Media House
Reuters Media Express delivers stories to more than 3,000 publishers in broadcast, digital, and print, so the partnership enables Red Bull to exponentially increase the reach of its content – and its ability to earn revenues against it. “The demand for sport and lifestyle content continues to rise, however many publishers lack the time or resources to produce or license it themselves,” says a Red Bull Media House spokesperson in reference to the Reuters deal.
Earlier this year, meanwhile, Red Bull agreed a deal with GoPro that will see the camera technology company gain access to more than 1,800 Red Bull events across more than 100 countries. In exchange, Red Bull has received equity in GoPro and the companies will share content rights on co-productions for distribution across both Red Bull and GoPro’s digital distribution networks.
The deal highlights the opportunities for business expansion when brands are able to create content that effectively conveys their values and wider role in the world. Indeed, Red Bull has demonstrated there is potentially no limit to how and from where a brand can generate revenue.