Unilever is streamling innovation and investing in its brands as it looks to navigate the next period of Covid-19.
Unilever is planning to increase investment in marketing in order to get the most out of “manpower intensive” digital advertising.
Speaking on an investor call this morning (22 October), CEO Alan Jope said Unilever had increased marketing spend in the third quarter of the year and would do so again in the fourth quarter. But he admitted while some of that spend would go on brand and marketing investment (BMI), Unilever also needed to invest more in its people to ensure they have the right skills as it ups investment in digital.
Jope said: “The balance between BMI that we spend in traditional media behind our brands versus the investment we have to make in people for a more manpower intensive marketing world, where digital programmes take more resources, is larger.”
He added: “You will see continued investment in our brands and sustainability and some investment in future-facing skills, especially in digital and marketing spaces.”
Unilever has previously said it will invest two-thirds of the £1.75bn it plans to save through efficiency programmes into marketing and digital, including improving its digital capabilities. It is setting up digital hubs around the company and hiring people with new digital skills.
To combat this the business is aggressively hiring people for digital hubs to “build around the company”. In order to “manage the content-driven, highly-targeted, data-led campaigns” it needs “new people with new skills”.
Investing in marketing
Despite the acknowledgement of the cost of digital in terms of people, Jope highlighted the effectiveness of Unilever’s digital campaigns.
“We very actively asses the quality of what we spend our money on, how good a campaign is etc. We are rigorous with use of digital mandatories, as we call them, on digital advertising. We have stronger safeguards than anybody to make sure when we spend in digital it shows up in safe environments in the digital world and most importantly is viewed by humans and not by robots,” he said.
The consumer goods company is pledging to spend more on marketing in the next quarter versus last year “because we have great assets and great innovations to invest behind”.
Jope claimed that at the start of the pandemic “we did a really good job of being dynamic, being agile and spending sensibly particularly with assets that were appropriate with the times.”
However, he believes now that there is a “more stable environment we are investing heavily in marketing to support our brand campaigns.”
He also stressed that “not all consumer companies are equal”. He explained: “The effectiveness of our brands is more effective than anyone else”
Unilever reported good results, with underlying sales increasing 4.4% in the third quarter, boosted by homecare sales as demand for cleaning and hygiene brands increased amid the pandemic. Of that growth, 3.9% came from an increase in volume sales and 0.5% from price. However, turnover was down by 2.4% to €12.9bn.
Jope noted that: “This headline figure masks huge volatility. We think the operating environment will remain volatility and in truth I continue to be perplexed by the discussion of a fast recovery”
The company also praised innovations, such as Dove’s moisturising hand gel, but noted that there has been an increased effort to streamline Unilever’s innovation programme. Compared to January the company now has 34% fewer projects in the funnel.