Since the pandemic began, one of the dilemmas among the main players in the industry has been the management of their advertising investments. And is that while some firms like Coca-Cola decided to curb their budgets in the matter, others like P&G not only decided to keep them, but also made them grow in an interesting way.
The reasons behind these initiatives were diverse; However, they both shared a point in common: Stay close to the consumer.
At the end of March, Coca-Cola released a statement in which it indicated that it would stop its advertising actions in the world. The statement was released through the different accounts on managed social networks where the same message adapted to each market was read:
“From April 1, we are going to suspend all activity for Coca-Cola and all of our brands. Our objective, at this moment, is to guarantee the safety and well-being of the entire society ”.
For the advertising industry, the blow was no less if we consider that, according to a recent estimate signed by LearnBonds, which, taking as a reference the data published in the company’s fiscal reports, pointed out that only during the past year, Coca- Cola invested a budget of $ 4.24 billion in advertising and marketing worldwide.
In the voice of Manuel Arroyo, Coca-Cola’s global CMO, the brand indicated in an interview with AdAge that communication efforts “will be mostly their own media, mostly digital” in an act of remaining “intentionally silent” in what they call “phase one” of the outbreak, a stage that would have been characterized by uncertainty, fear and panic.
In this way, the firm understood, according to its CMO, that at this time « the important thing is to do, not say » with which it has decided to send its advertising budget to donations that add to the fight against COVID-19.
Additionally, the brand thought about the reaction of consumers. As Arroyo mentioned, “We are Coca-Cola, you can’t imagine how many people jump when we go with a message like that. They say, « You better shut up and donate your ad spend, » explained Coca-Cola’s global CMO.
Although Coca-Cola’s decision may be correct for the consumer and was even applauded by many specialists, the truth is not all brands think the same.
In the opposite direction, P&G decided not only to maintain but to grow its investment in advertising terms.
The decision was communicated by the financial director of P&G, Jon Moeller, to the MarketingWeek medium, who confirmed that this budget will double because the consumption of media has increased significantly.
In this sense, according to Moeller, this phenomenon represents a great opportunity for the company in the intention of « reminding » its customers of the benefits of its brands and products.
“There is a huge advantage here in terms of reminding consumers of the benefits they have experienced from our brands and how they have served them and the needs of their families. That is why this is not the time to get off the air ”, explained the manager.
By category, it is estimated that the increase in advertising investment would be especially high in regard to babies, health care and beauty, because these lines have registered up to 20 percent increase in demand from consumers.
Time has passed and the consequences of these decisions are already visible and the refreshment unit is not quite right.
In its last quarter, Coca-Cola reported a fall in net sales corresponding to 25 percent, to as much as 7,200 million dollars.
The foregoing resulted in it reporting a net profit attributable to 1,779 million dollars between April and June 2020, a 31.8 percent less than the same period of a year ago.
This led the firm to consider job cuts as well as about 4 thousand voluntary retirements in markets such as the United States, Canada and Puerto Rico with the intention of reducing expenses by 550 million dollars. This has been his worst fall in 25 years.
Against part, Procter & Gamble (P&G) presented financial results for its fourth quarter and full fiscal year, reporting an increase in sales in both cases.
According to their US multi-brand conglomerate report, between April and June they registered sales for $ 17.7 billion, a growth of 4 percent compared to the same period but 2019. Meanwhile, for the full fiscal year, it indicated that its annual income amounted to $ 71 billion or a growth of 5 percent.
In addition to this, P&G indicated that it had a net profit between January and June $ 2.8 billion, representing a surprising recovery from the losses of $ 5.2 billion, registered during the same period of the previous year.
Although there are many factors behind these figures, the truth is that we are talking about examples that make clear the role that advertising plays in maintaining sales and weight in the market.
Since Kantar indicates that the effect of an advertising campaign is not momentary. A typical eight-week campaign is capable of delivering an average 4.5 percent increase in sales during the month after the campaign is broadcast.
In a natural and logical way this has an impact on sales and the strength that can be gained in the market.
“Taking as an example a brand that generates sales of 10 million dollars in a period of six months, if the brand would normally launch two campaigns in that period but decides to postpone or cancel them, it risks losing an average of 900 thousand dollars in income ”, reads the analysis.
It is not only about keeping current customers, but also about growing their base where advertising plays a crucial role.
The aforementioned source affirms that 86 percent of the brands that grew globally during the past year did so because they managed to increase their weight in the market.