PepsiCo is finding it hard to identify high-quality digital platforms to advertise on
PepisCo will bet more of its increased marketing budget this year on digital but is finding it harder to know where to spend that money due to a dearth of quality platforms.
The big constraint on moving more to digital is “identifying high-quality properties to advertise on,” admitted chief financial officer Hugh Johnston on the company’s quarterly earnings call last week (11 February). His attitude is similar to the one held by many of his peers that marketing needs to do more for less by focusing on cheaper albeit more effective digital activations.
“It’s not just a matter of going for pop-up ads anymore. It's really more sophisticated digital advertising,” continued Johnston. "And that is probably - more than anything, the rate-limiting factor is finding high-quality assets to invest in.”
That said, the business is actually getting more sophisticated in terms of its ability to measure the returns it gets on its digital investment via an expansion of its big data efforts. Without going into all the details, Johnston cited the fact that PepsiCo has been able to sustain 4 per cent to 5 per cent revenue growth in what has been a challenging environment.
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It’s why the business was able to sign off on nearly half (40 per cent) of Pepsi’s advertising budget for the Super Bowl this month going on digital. From Snapchat to Twitter, mobile to content marketing, the brand spread itself across several platforms over the weekend in order to generate added value beyond its TV buy.
As it has done over the last two years, PepsiCo will continue to invest in advertising in 2016. The snacks business increased advertising and marketing spend as a percentage of sales by 40 basis points for the full year in 2015 and 85 basis points in the fourth quarter. Total revenue slipped 7 per cent to $18.6bn in the three months to December, due to a hit on from foreigh exchange rates on international sales.