Diageo claims marketing effectiveness drive is making its ‘pounds work harder’

Diageo says investment in a new marketing effectiveness tool is paying off, with improvements in the rate of return on its investment in marketing leading to a bump in budget across its portfolio.

Diageo invested £60m more in marketing during the first half of its 2018 financial year, compared to the same period last year, thanks to savings delivered by its marketing effectiveness work.

The business, which owns brands including Guinness and Smirnoff, has been squarely focused on improving productivity and efficiency through initiatives such as Catalyst, a new digital interface developed with partners to provide instant data helping Diageo’s marketers make strategic and planning decisions.

READ MORE: How Diageo is proving marketing effectiveness

Savings have been made across most marketing activities, including everything from media and experiential to point of sale, the drinks giant said in its interim trading statement for the six months to 31 December 2017. 

The business told investors that Catalyst, which is being used by its 1,200 marketers across 55 countries to plan and allocate marketing spend across all brands is “enabling our pounds to work harder” by driving improved effectiveness. 

After a successful roll-out, marketers now use Catalyst in their day-to-day roles to continuously optimise their spend based on the most current data. 

“It is making a real difference,” Diageo’s report added. In India, for example, marketing spend was reallocated by state for its McDowell’s No.1 rum brand, while for its whisky Royal Challenge, Catalyst informed the decision to increase spend and reallocate it across media channels. These two changes alone saved more than £1.5m of value compared to the original plan.

As a result of these savings, Diageo increased investment in marketing to £968m during the period, versus £908m in the first half of its 2017 financial year. Globally, its marketing investment rate increased by more than 0.4 percentage points, with increased investment rates in all regions led by the US where its spirits business investment rate was up 0.71 percentage points.

Operating profit was up 6.1% to £2.2bn during the period, with net sales up 1.7% to £6.5bn.

Looking at specific brands, Johnnie Walker net sales are up by 7%, Baileys by 6%, Tanqueray by 16% and Guinness by 4%.