Pernod Ricard ‘dramatically’ ups Amazon ad spend as it marches on with in-housing push
Pernod Ricard has “dramatically” increased the money it spends on Amazon ads in the UK, according to Laurent Pillet, managing director for the spirits-maker in the market.
Pernod Ricard has found Amazon to be a “very effective” media platform
Three years ago, the Chivas, Havana and Beefeater owner spotted an opportunity to take action in a space where competitors were lagging – forging ties with e-commerce platforms. Now it claims to be the second-biggest spirits provider on Amazon with a 10% market share, and it’s looking to build on that by investing in its ad inventory.
Pillet wasn’t forthcoming what Amazon ad products the brand has funneled spend into, but says he has found it to be a “very effective” media platform.
Pernod Ricard declined to divulge its the exact amount it has invested but Pillet told journalists at a briefing on Thursday (30 August) the result is that "sales have grown by more than 100% with Amazon in the UK in the past year,”
The advertiser joins a swell of advertisers siphoning budget into Amazon’s offering, including L’Oreal which recently diverted some search spend into the marketplace.
Amazon’s ad sales aren’t yet near that of rivals like Google and Facebook. However, that an advertiser like Pernod Ricard (which spends about €1.7bn on marketing per-year) will admit to pouring a bigger proportion of its expenditure into the platform can only spell good news for the so-called ‘third force’.
The surest sign yet that Amazon is poised to stand shoulder-to-shoulder with the duopoly came last month when it revealed it had grown its ad business by 132% over the past three months to $2.2bn.
Since the end of last year Pernod Ricard has also been tapping into Amazon’s voice prowess, experimenting with an Alexa skill in the UK that reads out cocktail recipes to customers, based on the ingredients they have in their kitchen.
For now, shoppers can’t purchase the distiller’s gins or vodkas with a voice command on the Echo. What they can do is add a bottle to their shopping basket and complete the purchase online later.
However, Laurent says automated ordering is something Pernod is working on introducing after it’s rolled out the tool in the US market.
Media buying? 'We can do it ourselves'
The brand's investments in Amazon come among a wider marketing reset which has seen it in-house some ad buying function.
It’s something the World Federation of Advertisers says 40% of marketers are also doing in a bid to claw back control of their media spend on the back of concerns around ad fraud, viewability, brand safety and more.
In the first half of 2017 it saved €60m by becoming less reliant on agencies for programmatic and hiring internal experts. The savings were pumped back into the business.
Chief executive Alexandre Ricard says there’s still a place for its partners, but when it comes to buying, his attitude is: “why pay commission?” for someone else to do it.
“We can do it ourselves. Not only is it less expensive but it’s more efficient because we know what to target, how and when,"he said. What he is willing to pay for is “creative, disruptive ideas”.
“My expectations from media agencies and where they can really add fundamental value is creativity…that's the core of the business I expect from them,” he adds.
But, Pernod Ricard brands are also producing some creative internally. Whisky giant Chivas, for instance, works with McCann but also has an in-house studio which creates online content. Just now, a team of five people within Pernod Ricard are working on creative to promote its freshly-inked partnership with Manchester United.
It may seem small but Pernod Ricard says it will continue to “accelerate” in this direction.
The group posted its most recent financials this week, reporting organic sales growth of 6% 2017/18 at €8.9bn. Reported sales were down slightly at 0.3%, but profits were up 6.3% on 2016/2017 clocking in at €2.4bn.
This was largely driven by Asia thanks to interest in drinks like Martell and Absolut.
Chief exec Ricard singled out China as one of the hubs helping drive “digital transformation” in the business.