Coca-Cola presses the accelerator on digital

Coca-Cola is shifting media spending decisively towards digital and investing in generative AI initiatives, according to CEO James Quincey. 

“Our system has collectively invested in digital initiatives to drive on all facets of our strategy,” he told a Q3 earnings call. “We see momentum continuing across our industry and our system is galvanized more than ever to capture this opportunity,” he added. “Leveraging data to drive better decision-making is key to improving execution.” 

On media 

• “Today, Gen Zs spend 7 to 9 hours per day on screen. However, very little time is spent watching traditional TV,” Quincey said. 
• “In 2019, digital was less than 30% of our total media spend and year-to-date is over 60%.”
• “Digital campaigns segment the population that’s disproportionately reaching consumers where we earn higher return on investments. We’ve seen tremendous engagement through digital-first campaigns for Coke with meals, Sprite Heat Happens and Fuze Tea’s Made of Fusion, among others.”

On AI 

• “We’re taking bold steps to be at the forefront of both consumer and non-consumer-facing generative AI,” Quincey declared.
• “For example, we launched Create Real Magic which turns consumers into digital creators. We also brought Gen AI into our creative process for the award-winning Coca-Cola Masterpiece film and letting the fans the chance to take a piece of this work through the sale of NFTs.”
• “Recently, we launched Coke Y3000 … the world’s first futuristic flavor, co-created with AI. The launch has demonstrated strong initial results.” 
• “On the non-consumer facing side, we’re implementing generative AI to improve access to insight, market data, research and trends.”

On marketing 

• Quincey rejected a suggestion marketing investment is a “drag” on margins. “I’m not sure I would characterize extra marketing as a drag on results, more as a motor to driving the top line and the bottom line that we’re seeing.” 
• He also highlighted an expansion into alcoholic drinks (via partnerships with Jack Daniels and Absolut), occasion-based marketing events like Fanta Fest Turkey, and the linking of brands with consumers' passion points, such as a partnership with the Town Music Festival in Brazil. 

On consumer economics 

• “If you’ve got to save money, you don’t trade down averagely across everything,” Quincey observed. “You make a choice in certain categories and you preserve your choices on other categories.”
• “Our objective is to make sure consumers value our brands … if there is going to be a reduction in total spend, that happens in some other categories when they trade down to the private label”. 
• “We preserve our brand strengths because we deliver value for them in the product, in the marketing and innovation.”

Sourced from Seeking Alpha