Unilever is forgetting the “the old ways of marketing” as it invests in digital hubs and hiring new talent.
The FMCG giant is investing two-thirds of the £1.75bn it plans to save through efficiency programmes into marketing and digital, while the other third “to trickle down to the bottom line”, according to new CEO Alan Jope.
Speaking on an investor call today (31 January) Jope explained that a key priority for Unilever is improving its digital capabilities as more than 35% of the company’s media spend is on digital channels.
He explained: “It turns out that when you’re shifting directly and aggressively into digital, the constraint is not money in the BMI [brand and marketing investment] line, it’s people to run the digital campaigns.”
To combat this the business is aggressively hiring people for digital hubs to “build around the company”. In order to “manage the content-driven, highly-targeted, data-led campaigns” it needs “new people with new skills”.
In its first set of results since Jope became CEO of Unilever at the start of the year, he said the company now creates “content rather than advertising” while praising its personalised ads.
“Our old mass market model of driving consumer goods with mass brands sold in mass channels through mass distributions, systems and mass media is really being complemented by a very different type of marketing where we put purpose centre of our brands,” he says.
Unilever’s sales were lower-than-expected in the fourth quarter, as both economic and political uncertainty hit volume growth in developed market.
Unilever’s underlying sales were up 2.9%, behind analyst expectations of 3.5%. Turnover hit €49.6bn, with full-year sales growth likely to be at the bottom of its 3% to 5% forecast range, with the FMCG giant forecasting that market conditions will “remain challenging” through 2019.
Homecare was a highlight, with sales up 4.5%, while beauty and personal care saw underlying sales grow 3.1%, 2.5% of which was accounted for from volume growth. Food and refreshment (excluding spreads) was up 2.5%, with 1.6% volume helped by strong ice cream sales.
Jope added that the company was streamlining it supply chain and “adding back heads in the marketing space”.
However, he was quick to point out that the new sets of priorities were not set in stone. He said: “If we think for one second that our brands are being under-supported and that our BMI is insufficient, then we will react and we will prioritise growth and sufficiency of brand investment ahead of the bottom line. We just don’t think that’s necessary right at the moment.”
He concluded: “I’m calling out quality growth as our overall priority because it’s going to stimulate the business to put the attention on those changed areas that are so important in this madcap dynamic world that we’re doing business in.”