Pernod Ricard is increasing its focus on programmatic ad buying, as it looks to deliver savings and target consumers “in the way they want to engage”.
Speaking at a breakfast roundtable today (5 September) to discuss the company’s full-year results, the business admitted it is currently looking to make €200m (£184m) worth of savings by 2020.
In 2017 alone it managed to save €60m (£55m), of which around half was reinvested in innovations and its flagship Chivas Regal and Martell brands to help “them become global [brands]”.
The spirits company, which sells brands such as Absolut Vodka and Ballantine’s, said it is mainly looking to save money by buying more of its digital advertising programmatically and creating more content in-house.
“Programmatic digital media buying can be very powerful for saving, bringing more efficiency and to target consumers in the way they want to engage,” said Gilles Bogaert, managing director of finance and operations at Pernod Ricard.
“We have also created some studios among separate brand companies to be able to internalise part of the production. We still use some creative agencies, but on production, [it can make more sense] doing it ourselves.”
Digital and programmatic advertising have come in for scrutiny this year. Procter and Gamble’s chief brand officer Marc Pritchard previously slammed the “murky” media supply system, and Google found itself in the firing line after The Times newspaper revealed that brand advertising was being placed next to pornographic and extremist content on YouTube.
When questioned by Marketing Week on whether the negative headlines have led Pernod Ricard to make any changes to how it approaches digital advertising, it claims to have been talking more closely to the social media giants and its own agencies about brand safety – but insists programmatic remains important to the company.
“We remain very cautious about programmatic ad buying. In the UK, a bit more than 60% of our total media investment is through digital, with the vast majority of it placed through programmatic media buying. We would not like to see our ads appearing in websites or an online platforms which are not in agreement with the principles that we defend as a company,” Laurent Pillet, managing director of Pernod Ricard UK, told Marketing Week.
“We are cautious about that, we think it’s the right approach to have big social platforms looking at it but also have our agencies look at specific and respecting our codes of communications.”
Pernod Ricard previously admitted to moving more services typically provided by agencies in-house in a bid to get to know its customers better. In February, the company said it took a lot of its media buying, programmatic and data collection in-house, as it believes having direct consumer relationships is “the way forward”.
Improving the effectiveness of promotions
Pernod Ricard is also taking a closer look at its promotional spending and training its employees to “manage them more efficiently”.
In one market it found 35% of promotions weren’t delivering positive value, and as a result “had to be adjusted”. The company will now roll out a “roadmap” across the group over the next two years to boost effectiveness.
“It’s about managing the duration and depths of promotions and the frequently – clearly we have done a deep dive and in some markets promotions don’t create value and should be stopped. We need to have agility to be able to adjust,” Bogaert said.
Pernod Ricard is not the only firm taking a closer look at promotions. Other FMCG giants such as Mondelez, P&G and Unilever had previously moved away from them to save money.
“When you have the right data to be able to measure [the results], you can make decisions. Doing that initiative will improve our pricing going forward,” he concluded.