Unilever points to ‘significant efficiencies’ as it increases share of ad voice

Despite weaker than expected fourth quarter and full-year sales, Unilever appears to be getting more for its marketing money after increasing its share of advertising spend while maintaining brand and marketing investment

The FMCG giant said it increased its share of spend while maintaining brand and marketing investment at 14.8% in 2014.

It said this had been achieved by “significant efficiencies in the cost of producing advertising.”

This could be in part due to a continued increase in digital ad spend, which rose by 20% in the third quarter – up from 17% the previous year. At the time, Unilever’ chief executive Paul Polman said the shift to digital was resulting in “better ROI” and pledged to continue the rise in digital spend into the fourth quarter.

The firm, which produces Marmite and Ben & Jerry’s ice cream, has also significantly cut non-working media spend – production costs and agency fees – over recent years, with both previously at “embarrassing levels” according to Polman last October. In the third quarter costs were cut by four percentage points to 20%, a full saving of around £100m, while the FMCG giant also cut its number of marketers by 12% globally – cutting around 840 jobs – in order to reduce costs.

Polman today (20 January) revealed that demand for Unilever products in emerging markets had slowed contributing to a 2.7% fall in full-year sales to €48.4bn ($56.1bn; £37.1bn) in 2014. Unilever has been negatively impacted by a combination of slowing growth in China, a recession in Brazil as well as western sanctions on Russia.

Analysts had predicted a 3.1% rise in full-year underlying sales but, excluding the effect of acquisitions and unfavourable exchange rates, they only increased by 2.9%.

Meanwhile, although underlying sales were up 2.1% in the fourth quarter, these were well below forecasts, with analysts predicting a 2.6 % rise.

Polman warned that 2015 will be “another challenging year for the retail industry” and expects full year performance to “not improve” and “be in line with 2014.”

“The Unilever Sustainable Living Plan continues to underpin all aspects of our business model from the way we source materials through to our product innovations,” he said. “This is well-recognised and an important way of reducing cost and risk in increasingly well-informed and challenging societies.”