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Why Pernod Ricard is confident spending money on targeted ads despite growing industry unease

Facebook targeted advertising

Pernod Ricard has brushed aside growing concerns that the use of targeting advertising on social media is proving unsuccessful and is instead confident that the tool can help the drinks business to better reach consumers over traditional advertising.

The business is continuing to shift its media spend towards digital and has upped its digital across the medium in the UK from 31 per cent to 40 per cent year-on-year in 2016, with a chunk of this focussed on targeted adverts.

Speaking to The Drum at the Pernod Ricard 2015/2016 full year results breakfast, UK managing director Denis O’Flynn said that although there is a limit to the amount of data brands can gather and “slice and dice” to see the ROI of targeted advertising on platforms such as Facebook, its tracking tools suggest that the approach is proving successful.

“I think there will be a limit to the amount of data that you have and how you can actually slice and dice that data, but certainly all the trends would indicate that the more targeted approach should work better than a blanket post.”

Pernod Ricard currently does this based on geographical location as well as by age and profile. For example, if the drinks company wanted to promote its premium scotch brand Chivas, it would look to target consumers living in London or the South East areas.

“We work with retailers on targeting and specifically there are certain programmes on sociomantics that we use to absolutely target the consumer…Our percentage spend on that whole area is increasing, how far it goes to replacing traditional media I don’t know, but at the moment the 40 per cent seems to feel about right as we sit at the moment. It’s a case of let’s review it as we go but it certainly is working.”

O’Flynn’s comments come at a time when advertisers are starting to question whether they have over-invested in digital. Last month, the biggest advertising spender in the world, Procter & Gamble said that it would be moving away from Facebook targeted advertising after admitting that the technique did not prove as effective as the company thought it would be.

Marc Pritchard, global marketing officer at P&G, told the Wall Street Journal that the company would not be cutting back on Facebook ad spending overall, but that “we targeted too much and went too narrow.” He went on to say that P&G is looking to find a balance between getting the most reach with the right precision.

While the maker of Absolut and Jameson doesn’t have the same $7.2bn advertising clout that P&G reportedly spent in 2015, digital media is a growing focus for its brands and the company will no doubt be closely watching its effectiveness. As an example, in the UK Pernod Ricard spent 50 per cent more on digital media for Absolut compared to the same period last year.

“We are permanently measuring our social media activity. We have social media measuring tools and all of our teams have big screens watching the activity of their brands. All of this is at the heart of what we are trying to do,” said Laurent Lacassagne, chairman and chief executive at Chivas Brothers. “Digital media is very targeted, more than traditional media and secondly it is measurable as long as you find the right KPI. [It is more effective] than an ad in the newspaper when you don’t know who read it or who bought the product.”

Elsewhere, Pernod Ricard is exploring how it can apply its recent Internet of Things (IoT) activity with its Malibu brand to other drinks products in its portfolio to bring the “product, experience and consumer all together”.

Last month, it dived head long in to the IoT space and rolled out 40,000 NFC enabled Malibu bottles in the hope that it could eventually treat each one as a media buy.

Once tapped the bottles allowed consumers to access five different digital experiences including instant win prizes and a holiday to Barbados.

“I think that as messaging on product, whether that be to do with the product itself, health guidelines, how to mix it, how to serve it, all of that information is going to be required in the future and I think it’s going to be via some sort of smart technology,” added O’Flynn.

Across the business Pernod Ricard is planning to use its staff to become brand ambassadors and is encouraging them to share more content with one another on social media via its partnership with LinkedIn.

The move is part of the company’s wider efforts to bolster its corporate image that has already seen its chief executive Alexandre Ricard do more on various social networks.

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