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Top 100 Marketer CEO and CFO 2Q23 Commentary
I try to follow comments that companies’ CEOs and CFOs make about their advertising and marketing activities on earnings calls. Below are verbatim statements from earnings calls transcripts from over the past month to help understand how those individuals (and their companies, all among the 100 largest advertisers globally) are thinking about related issues.
In alphabetical order, this note covers calls from Allstate, American Express, Beiersdorf, Capital One, Clorox, Colgate-Palmolive, Kellogg’s, LVMH, Nestle, P&G, Restaurant Brands International and Wayfair
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Allstate (August 2, 2023)
“We…temporarily reduced advertising to reflect the lower appetite for new business.”
- Mario Rizzo, President Property-Liability
American Express (July 21, 2023)
“We remain focused on driving efficiencies so that our marketing dollars grow slower than revenues while continuing to drive the high-quality new accounts”
- Stephen Squeri, CEO
Beiersdorf (August 3, 2023)
“We increased efficiencies within the marketing budget and can report significant increases in absolute and relative terms in working media, specifically in digital spending.”
- Astrid Hermann, CFO
Capital One (July 20, 2023)
“Why we're investing heavily in marketing:… first of all, we just see attractive growth opportunities across our business, particularly in the card business. We've continued to expand our products and our marketing channels. We're seeing very good traction. These opportunities are significantly enhanced by our technology transformation that enabled us to leverage more data, access more channels, leverage machine learning models and provide customized solutions that continues to just generate very good performance, and we're leaning in to capitalize on that”
- Richard Fairbank, CEO
Clorox (August 2, 2023)
“We've spent about 10% of sales on advertising and sales promotion over our history. And there's times we've spent more than that. This year, we're targeting 11%, and we think that's a prudent investment given the pressure the consumer is going to be under from a macroeconomic perspective, the fact that we are coming off of four rounds of pricing -- significant price increase, obviously, cost justified. But we want to continue to support the consumer as they transition through that. And so we think 11% is the right number.
“And you have two data points that give us confidence that 11% is the right number. During the pandemic, we took our advertising spending up even at a time when we couldn't fully supply. That increase in advertising led to stronger superiority ratings for our brands, and that gave us the confidence to take the four rounds of pricing that we took. So we think, again, in a time where consumers are pressured and stressed, investing that additional point of advertising makes a lot of sense.
“And then the second data point I would give you is that we've been on a journey to get to know 100 million consumers in the U.S., and that allows us to personalize to them. This was part of our IGNITE strategy. We've nearly met that goal, and that has led to a return on investment in our advertising being the highest it ever was. We reached a high point this year. So we feel really good about putting that extra point in because we know what we're going to get from a returns perspective in addition to supporting the superiority of our brands. And again, we'll continue to evaluate this moving forward. It doesn't mean it will necessarily be 11% the year after. This is really a roll up of what we think our general managers need to best support our brands during this time.”
- Linda Rendle, CEO
Colgate-Palmolive (July 28, 2023)
“(Pet food) is a business that responds very well to science-driven innovation and strong advertising. We want to make sure that it's well funded and through the gross margin expansion that you've seen. And Hill's saw the biggest advertising increases in brand building in this quarter and will continue to fuel that investment.”
“Advertising doesn't respond immediately. It takes quarters after quarters of consistent growth. And what's important, back to the quality of the P&L, is that with the quality of the P&L where it is, it allows us to sustain that advertising. In this quarter, you obviously saw us increase it. And that's clearly the strategy because over the long term, consistent levels of advertising play out for brands the best.”
“Advertising is the healthiest way to grow the business longer term.”
“Our focus on digital advertising is yielding a much higher ROI, we have the ability to analytically measure that much more effectively than we have in the past. Our [copy] effectiveness is getting much better. So we're seeing the efficacy delivered there through the brand health measures that I talked about earlier.
“We're obviously spending more money on generating first-party data. That allows us to obviously look more holistically across the market and get more targeted media that's more personalized and effective, which has been terrific. And as I mentioned upfront, the non-promoted volume share in the U.S. is a big metric for us, because that clearly indicates that our advertising is driving more non-promoted share. So we were up about 100 basis points in non-promoted share. And that's excellent. That's exactly what we want. Now we may have pulled back, as I mentioned, a little too much on the promotion, but we'll get the balance right as we move forward.
“So the efficacy overall, we're very pleased. And that's clearly demonstrated in some of the market share performances we have around the world where we've had elevated advertising to support that, particularly across some of the brands -- non-Colgate brands. I mentioned Sanex in Europe. We talked about the Suavitel business and the Axion business in Mexico, which is obviously well supported. So overall, we see a more healthy balance of advertising across our categories. And over time, this is going to lead to more sustainable growth.
- Noel Wallace, CEO
Kellogg’s (August 9, 2023)
“Each of our (W.K. Kellogg) regions has planned to improve margins…while still incorporating rising investment in our brands with advertising and promotion rising faster than net sales growth.
- Amit Banati, CFO
“We're moving to a new media strategy and approach that will enable us to better reach our target consumers. More digital, more social, more commerce led, more first-party data and all enabled by data, analytics and AI. Then we have moved to a more integrated agency model, eliminating the cost and sometimes unproductive time it takes to work across multiple agencies. We now have two trusted partners with strong capability. And we also have one integrated marketing team on our side. Brand marketing, innovation, promotions, licensing, omni-commerce, insights and analytics are now all together in one team.”
- Doug Vandevelde, SVP Global Breakfast Category
LVMH (July 25, 2023)
“What we’ve seen over the last 3, 4 years is, roughly speaking, an increase of…1% of sales in terms of advertising and promotion. I think we moved roughly speaking from 11 to 12, something like that. We have benefited from significant operating leverage on selling expenses. So basically we have reinvested into advertising and promotion, what we've been saving on selling expenses.”
“Whether (a 24% marketing spending increase is) a new normal or not. I don't think so. We had in the first half of the year a number of events, particularly that bear in mind that there is a cost coming with these events. But on top of that, there is also a marketing support on advertising and media that we have to do to make them more efficient.”
- Jean-Jacques Guiony, CFO
Nestle (July 27, 2023)
“We value consumer-facing marketing investment as a key growth driver supporting our brands and innovation…In 2022, we temporarily reduced our investment levels as we limited advertising and marketing activities in the context of supply chain constraints.
“We look at marketing and trade spend jointly because we often arbitrate between these two lines of the P&L. In the second half of 2022, we increased our trade spend in Swiss francs versus the first half as we focused on increasing accessibility and affordability of our products in the context of unprecedented pricing to compensate for significant inflation.
“In the first half of 2023, our advertising and marketing spend increased by 7.5% in constant currency versus the same period of the prior year. As a percentage of sales, it was 7.1%, representing a 50 basis points increase over the second half of 2022. In the second half of 2023, we expect to further increase our marketing investments.”
- François-Xavier Roger, CFO
Procter & Gamble (July 28, 2023)
“For us, any type of media spend, whether it's digital, online OTT TV, print or, as you say, customer media is part of the total mix. So what we're looking to do is optimize our reach effectively with the target and the frequency across all of those different touch points.
“And just like any other channel, retailer media needs to earn its place in our marketing mix model based on the relative return that it can provide. Now are we working with our retail partners to maximize that return? Absolutely. There are plenty of opportunities in data sharing combining transaction data with media data to optimize and that is a strong reason why retailer-based marketing spending can make sense.
“But it is part of the overall marketing mix and it's managed in that way. So really, it's the brand teams that are managing their overall mix. And they are collaborating closely with the customer teams because in many cases, a well-timed investment in retailer media in line with merchandising plans on the floor or online can provide superior return on investment.”
- Andre Schulten, CFO
Restaurant Brands International (August 8, 2023)
“(Burger King US has) more and more advertising dollars that we're going to be prepared to spend”
- Joshua Kobza, CEO
Wayfair (August 10, 2023)
“We try to meet our customers early in their life journey. We place a focus on engaging with customers when they're really entering into this stage of their life. And the point of that, I think, is pretty obvious, but we want to establish that relationship with them early. We want to establish that trust with them early. We want them to have good feelings about Wayfair early so that as they grow in their spending power, as they grow in the size of their home or they grow the size of their family, that they're thinking about Wayfair as being there for them along that journey. And so we also want to be, frankly, omnipresent.”
“All of (Wayfair’s marketing activity is) built on top of our proprietary measurement platform, Themis. Themis is technology…that we've been investing in for years that allows us to feel disciplined and principled about our investments here, it allows us to know quite accurately the ROI of our investments across a number of channels. It's been trained on our data, right? The important -- like why we're so confident in this as it's been half a decade of training on large, large data sets of just Wayfair's data, right? Not just clicks, but impressions, catalog drops, online and offline, calls into our call centers, log-ins across multiple devices, television advertisements in their region, their long-term purchasing history with Wayfair. And we're constantly testing and validating and revalidating and iterating on these models to give us confidence in our investment in media.”
“I don't know necessarily the trackability or the measurement (of connected TV and linear TV) is actually all that different between those channels. And instead, we look at them more just from an efficiency standpoint…I don't think we really see…the difference between those 2 as having a material impact on sort of where we're going to spend.”
- Paul Toms, CMO:
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