Unilever prioritises ROI

02 May 2011

LONDON: Unilever, the FMCG group, is heightening efforts to boost its return on marketing investment, a scheme spanning advertising, media buying and promotions.

The owner of Ben & Jerry's, Dove and Knorr witnessed a 7% leap in revenues during the last three months, to €10.9bn ($16.1bn; £9.7bn), including an underlying sales expansion of 4.3%.

"We remain unequivocal in viewing the brands as our most important asset," said Jean-Marc Huet, Unilever's chief financial officer, on a conference call with analysts.

"Whatever the rest of this volatile year may bring we will not take actions that could damage the health of our brands over the long term."

"Nor we will slow down in our pace of innovation, or in our new market launches."

Developing nations contributed 56% of Unilever's turnover in the last quarter, a record level, and an indicator that fast-growth economies are becoming increasingly integral to the organisation's future.

Such results came despite the fact prices rose by 3.2% across these geographies, measured against a 1.8% lift globally, although this latter figure represented the first positive movement for seven quarters.

Among the countries generating double-digit gains were China, Indonesia, Mexico, Nigeria and South Africa.

"We expect emerging markets to drive around 75% of our growth over the long term," said Huet, citing its wide portfolio, overall scale and deep distribution networks as fuelling this process.

"With per capita consumption still low, we are able to build on these foundations with market development programmes that drive consistently superior growth."

Less favourably, North America and Western Europe experienced year on year contractions, and marketing will play a key role in reversing such trends and reinforcing encouraging shifts elsewhere.

Communications is a discipline which has come under recent scrutiny as part of Unilever's Compass project, aiming to rejuvenate numerous aspects of its activity.

Huet said: "Our efforts are focused on a programme we call 'Return on Marketing Investment.'"

"This is a global initiative and we are starting to see substantial benefits from many markets around the world. It is a great example of what Unilever can do when aligned around a clear priority action from the Compass framework."

"We have shown this in the past with working capital, and now we are starting to do the same with marketing investments."

Regarding advertising, this has necessitated streamlining various core tasks and securing the best deals possible.

"We are reducing non-productive spend by leveraging our scale better, duplicating work less and getting more copy on air. This allows us to hold our overall media spend remain fully competitive," said Huet.

Similar processes apply to media buying, where the Anglo-Dutch operator is exploiting its size to beneficial effect.

"We are making more use of our scale and buying to drive savings," Huet said.

Promotional evaluation has also been enhanced, both in broadening the coverage of information, and deriving the maximum value from expenditure.

Even in areas like artwork, attempts are being made to optimise strategies, thus trimming outgoings and ensuring goods hit store shelves more quickly.

Recruitment constitutes another sector in which Unilever is adapting its approach, emphasising positions primarily looking outwards.

"We are redirecting our resources towards the consumer and customer, with fewer support staff in the business and more of our resources now in external-facing roles," said Huet.

"These indirects and marketing efficiency initiatives, alongside supply chain savings … are critical components of the virtuous circle of growth that we are striving for."

"Success in cost reduction will allow us to invest more behind our innovations and new market launches, which in turn will drive higher growth."

Data sourced from Unilever; additional content by Warc staff