Mondelez is quickening efforts to slash non-working advertising costs so that it can spend more on parts of the digital spectrum it knows yield strong returns.
Its ongoing charge for harder working media comes off the back of a 4.1 per cent revenue jump from its power brands for the full year despite cutting marketing costs. To achieve the growth, Mondelez upweighted spend for top products such as Cadbury and Oreo using the savings from consolidated media accounts and the removal of more non-working ads.
The business has spent much of the last two years carefully stockpiling a more effective media arsenal, striking deals with the likes of Facebook and Google while also shifting more spend into the automated advertising space. It is taking a more active role in the media buying process, particularly around online video now that it accounts for around 10 per cent of its ad budget.
These marketing investments are starting to come good for a business looking to optimise its brand portfolio. It spun off its coffee business in the first half of 2014 and cranked up productivity in emerging markets, which account for nearly 50 per cent of its total revenue.
Brian Gladden, chief financial officer at Mondelez, told analysts during the earnings call for its fourth quarter yesterday evening (11 February), that the business expects to see further progress in “getting productivity and allowing us to spend those dollars on real working media”.
“The team has done a really good job in managing the spend,” he added. “We made some great progress in driving productivity in the spend around non-working, consolidating media accounts, reducing the spending and driving productivity and then moving more to digital. So all of these elements, I think gave us some flexibility to take the spend down a bit but also to continue to get value from the spend.”
Value will also come from the marketing department’s ongoing adoption of zero-based-budgeting. Concocted as a way to consistently pull funds from costs that have no impact on sales, Mondelez marketers have been exposed to various elements of the company-wide initiative.
Mondelez’s media march is indicative of a wider paradigm shift impacting the world’s biggest companies. Coca-Cola, Diageo and Unilever are among those pushing to understand the value of media in a more sophisticated marketing strategies trying to balance both reach and tighter targeting.