Unilever boosts digital spending

30 July 2012

LONDON: Unilever, the consumer goods giant, has increased its digital adspend by 50% during 2012 to date, part of a broader commitment to utilising advertising as a means of fuelling growth.

The firm, which makes brands like Axe, Dove and Lipton, allocated €3.3bn to ads and promotions (A&P) in the first half of 2012, a leap of €300m annually, with advertising taking 70% of new funds.

Jean-Marc Huet, Unilever's chief financial officer, told analysts on a conference call that digital media only took a "small proportion" of ad revenues at present, but this figure was expanding at "very high rates".

"Although still a small proportion of the total, digital advertising is up by 50% year on year, reflecting the increasing time spent by consumers online," he said.

Looking at Unilever's advertising as whole, Huet stated money alone was not making the difference. "Happily, it's not just the quantity, but it's also the quality of advertising which is improving," he said.

Unilever has been on a cost-cutting drive across various aspects of its operations, a process that has "allowed us to invest" in advertising and promotion, Paul Polman, its chief executive, added.

Having seen sales rise by 11.5%, to €25.4bn, in the opening six months of this year, including underlying growth of 7%, he suggested a reduction in advertising expenditure was not a viable option.

"I don't see any reason why the full year A&P spend should not be up," he said. "There are many sceptics out there; I think that should stop now ... I hope these first six months' results put that at ease for a lot of people."

"We're investing whilst we are making it more efficient with the move to digital and some other things that we're doing. So we're definitely getting more bang for our buck."

Polman also reported that the quality of its creative was stronger, as were the results of its ad testing. Taking a disciplined approach to channels where the returns are highest has proved equally beneficial.

"Whilst, undoubtedly, I know that we have a lot of opportunities to still improve in ... in terms of the effectiveness of our A&P spent, we're doing well," he continued.

"We continue to think that the best way long term for our shareholders is to strengthen our brands and brand equities and that frankly is innovation and A&P."

Data sourced from Seeking Alpha; additional content by Warc staff