The last decade has been tough for FMCG marketers. The financial crisis proved to be a catalyst that accelerated several forces that were already starting to disrupt the traditional FMCG growth model.
The rise of the discounters and subsequent discounting by mainstream retailers has hit marketing budgets hard and devalued brands. With the discounters continuing to grow it feels as though price consciousness is the new normal.
The smartest brands, often smaller start-ups have seen this as an opportunity, stepping into the more premium price points vacated by the legacy brands. They have also embraced new digital channels, exposing the larger FMCG companies as being slow to change. Through all this the pressure on FMCG marketers has intensified, with a much higher level of scrutiny being applied to all marketing expenditure.
The £1.5m that we invested in the wonderful ‘Go on Lad’ TV commercial now feels like a last hurrah for great FMCG advertising
Almost exactly 10 years ago I made the decision to leave Pepsico and join the upstart of the UK food and drink sector, Premier Foods for a marketing director role. It’s fair to say that friends and family thought it was an odd decision but I was hungry for the sort of challenge and autonomy that was on offer.
You can imagine my shock when, shortly after accepting the offer, I read an article in The Sunday Times (a real paper!) headlined "Is Premier Foods Toast?". During the acquisition of RHM the company had piled up a huge amount of cheap debt, but the financial crisis had hiked interest rates and questions were being raised.
At first my life at Premier Foods was a pleasure, I was given the freedom that I was promised along with the budget to turnaround the wonderful Hovis brand. The £1.5m that we invested in the wonderful "Go on Lad" TV commercial now feels like a last hurrah for great FMCG advertising.
And I think it’s fair to say that digital marketing was not top of our agenda, we might have refreshed the website for our 50 monthly visitors, but not much more. The results were spectacular, we drove £50m of incremental sales and really understood the return that we gained from our brand-building investment.
I was then promoted to chief marketing officer and that’s when things got tricky. The Sunday Times article had proved to be prophetic and my time was spent on disposals, investment strategy and refinancing. It was all new to me, but I loved learning new stuff and got my first taste of the pleasures of more consultative work.
From Premier Foods I moved to Unilever where I ran the UK food and refreshment business. Life didn’t become any easier. Unilever was feeling the consequences of the financial crisis just as hard as anyone. In the UK we were losing share to the small start-up brands who suddenly had a much lower barrier to entry; ready-made capacity at a bunch of struggling third party manufacturers, great value digital media channels and big retail customers who were looking to funky brands to differentiate them from the emergent Aldi and Lidl.
Two of the many fascinating things that Harriet Green shared stuck with me; the importance of every person in a business to drive cash and the fact that 80% of the world's data is not publicly available and sits, often unused, within large organisations
Unilever has responded innovatively and bravely, but despite monumental programmes around digital transformation, purpose-driven brands, partnerships with tech start-ups, zero based budgeting, etc, the reality is that growth in developed markets remains modest and it’s the continuing growth in physical availability in emerging markets which keeps the top-line looking healthy.
Interestingly, it’s Unilever’s programme of small brand acquisitions which looks to have been most successful. As the start-ups have started to scale, Unilever has bought the pick of the bunch; Dollar Shave Club in personal care; Grom and Talenti in ice cream; T2, and Pukka in tea and many more.
These acquisitions have introduced a new set of capabilities, particularly marketers who are true digital natives and understand intuitively how FMCG brands can embrace data and digital channels, particularly search and social media, to drive sales.
This brings me on to the last 12 months. I now work as a brand consultant, operating across a broad range of clients and sectors. Increasingly I’m working with online businesses who have none of the FMCG hang-ups. They know the importance of broad reach and still see TV as the most effective medium to achieve it. They then support this salience driving activity with a smart blend of SEO and SEM and field activity that brings their brands to life in their customers real lives.
Most impressively they are incredibly comfortable with data and the divide between marketing, sales, finance and IT is almost invisible. They know how every penny of investment works and continuously refresh their plans to optimise their return on investment.
This is harder for FMCG brands. It is much trickier to understand the path to purchase for a can of baked beans bought in Tesco than it is for an online purchase of insurance, a holiday or a mortgage. However, I do think FMCG companies can learn from these highly successful online businesses and become way more obsessive about what drives sales.
I once had a boss (at Premier Foods!) who said, "the trouble with marketers is that they know how to spend money but not how to make it". That is still true of many FMCG marketers but not of the generation of marketers who have grown up nurturing online brands.
I had the good fortune of hearing Harriet Green speak at a recent Marketing Society event. Harriet is the former chief executive of Thomas Cook and now runs the Watson AI programme at IBM. Two of the many fascinating things that she shared stuck with me; the importance of every person in a business to drive cash and the fact that 80% of the world's data is not publicly available and sits, often unused, within large organisations.
While I am nostalgic for the period a decade ago when one amazing TV commercial could turnaround the fortunes of a brand I feel excited about the current era and the huge opportunity that FMCG marketers have to embrace this powerful data and convert it into progressive brand-building strategies and plans which will ultimately sell more stuff.