Mondelez marketers to face new cost-control strategy
Mondelez International marketers have been put on alert over plans to introduce a more “cost-focused culture” that could see a switch to cheaper digital channels as the company says online will get more than half its ad dollars in North America by 2016.
The snacks maker has hired management consultancy firm Accenture to implement a cost-control strategy to “rapidly” take out costs from the business after lamenting its ‘disappointing” performance in 2013, which saw total revenue remain flat at $4.49bn (£2.7bn).
The program will streamline operations across the business and look to deliver $3bn (£1.8bn) in savings over the next three years. Mondelez says brand managers will be asked to adopt “zero-based budgeting”, meaning media plans will start from scratch rather than being based on the previous year’s spend.
Irene Rosenfield, chief executive at Mondelez, told attendees at the Consumer Analyst Group conference last night (19 February) the process would require “maniacal focus from the top” resulting in the company identifying leaders to drive the change.
Mondelez declined to comment on whether the flurry of cost control measures would lead to job cuts to its marketing team. The strategy, however, is already beginning to affect how its brand teams plan campaigns in North America.
The region is planning to pump 50 per cent of its media budget into digital advertising by 2016 after claiming it drives “twice the ROI of traditional TV advertising”. Mondelez currently spends around a quarter of its budget on digital promotions and will focus on targeting consumers at the point-of-sale.
Mark Clouse, president of Mondelez North America, pointed to the company’s work on its Trident chewing gum brand last year as an example of how the revamped media mix could drive sales. Trident’s spend had shifted away from TV to more relevant and “higher returning” digital, mobile, in-store and out-of-home, he added, with critical proximity to key retailers. The result was that the brand grew by 2 share points in the second half of 2013.
Mondelez did not share details on how the strategy would affect its European business but said it was “excited about the opportunities”. The company revamped its European digital roster last June so that there are two groups of agencies – full-service agencies and specialists to focus on social media and branded content. It also has global deals with Twitter and Google.
The changes reflect a wider shift happening across the FMCG sector where companies such as Unilever and Pernod Ricard are doubling down on digital marketing initiatives amid cost-saving restructures. Most recently, SABMiller said it would bring in more digital experts in the hopes of fuelling its efforts to create more global brand concepts and advertising.
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