Left on the Shelf

Over the next week or so, well be posting some of the best features from the latest edition of our quarterly magazine. Alternatively, if you want the full experience, with pictures, boxouts and all, you can read the issue online here or subscribe to receive the print edition here.

Coca-Cola is not used to playing catch-up. Whether it’s bringing new products to market, pioneering packaging, or being at the forefront of digital technology, the company is used to leading the market.  

But Joseph Tripodi, Coca-Cola’s executive vice president and chief marketing and commercial officer, has admitted that when it comes to mobile, Coca-Cola is lagging behind the market – and he wants to catch-up fast.

It is not that the soft-drinks maker has been caught standing still. In fact Coca-Cola has run some highly successful mobile campaigns, including a Cannes Lions winner.

The problem has been that even its highly skilled marketers have been outpaced by the frantic take-up of smartphones, and the speed at which these devices have become indispensable to people’s lives.

“It’s the single largest change in consumer behaviour in our lifetime, this unbelievable adoption to this mobile device as a remote control for your life,” says Tripodi. “It’s something we have not seen before.”

“Our mobile spend is probably at five per cent. It probably should be around 15-20 per cent of our overall spend. We will migrate this over the next couple of years.” The maker of Coke, Sprite and Fanta is not alone.

FMCG brands targeting mobile

FMCG giants such as Unilever and Danone are hurriedly directing marketing spends towards mobile, as they look to take advantage of the spectrum of opportunities it presents, from dual screening, gaming applications, and location based services.

And with consumer goods mobile marketing spend increasing a whopping 235 per cent on the year in the UK in 2012, according to Millennial Media, it is clear FMCG brands are no longer prepared to be caught napping.

Gone are the days of FMCG giants relying solely on in-store displays to drive impulse purchases. The modern shopper shops from aisle to aisle with their heads buried in their smartphone.

That is why earlier this year, Cadbury-owner Mondelez struck a landmark mobile media deal with Google, as it looks to reach its goal of 10 per cent of its global marketing spend being spent on mobile.

For FMCG brands, the hackneyed mantra of this ‘being the year of mobile marketing’ is redundant. Mobile is fast becoming central to the marketing mix, and the big names must get on board.

According to data from the IAB by accountancy firm PwC, marketers spent £526m on mobile advertisements in 2012, compared with £203m the previous year – with Google taking the biggest share of the revenue.

But there still remains a vast discrepancy between the amount of time consumers spend on their mobile devices and the amount of advertising money companies spend there.

And FMCG brands, for a variety of reasons, are lagging behind other sectors. This vertical was ranked sixth in 2012, behind market leading sector retail, and in the shadow of telecoms, finance, and automotive companies, according to research from Millennial Media.

But with Mondelez and Coca-Cola making such firm commitments to up their mobile marketing spends and the likes of Unilever sending senior executives to attend flagship events like Mobile World Congress and SWSX, there appears little doubt that FMCG companies are finally grasping the shifting sands of mobile technology.

Eileen Naughton, vice president of global sales at Google, says: “We’ve been urging mobile readiness at Google for three-plus years, and this has been the year where it seems like the light has gone off over most marketers’ heads.”

Lagging behind

For FMCG marketers, the problem may not be a marketing one, but an economic one: marketing budgets are in general not growing, but staying the same or being squeezed. Finding the spend for mobile campaigns can prove tricky in a vertical that’s dominated by the perceived reliability of traditional marketing.

Tripodi said: “The biggest challenge for marketers is the pie isn’t getting significantly bigger from a spending point of view. The biggest challenge is how you allocate resources across all those different end points.”

There is also still uncertainty over strategy. Should mobile spending be used for brand awareness? Driving site traffic? To facilitate impulse purchasing

According to Tripodi, Coke is still trying to fathom this out. “I think we have also to understand how to use it,” he says. “Are we using it for information? Are we using it do drive traffic to our customer partners, like ‘here’s a mobile coupon for McDonalds, go try our new Coke Zero drink’. There are many ways it can be used.”

A further issue muddying the waters is the sheer logistical endeavour of mounting a global mobile campaign.  

Jay Altschuler, global communications planning director at Unilever, says: “The sheer number of different phones on the market, all requiring different advertising specs, make it very complicated and inefficient for a company that is trying to run global campaigns.”

Throw into the mix the fact that mobile effectiveness is notoriously difficult to measure and that there is no definitive study to prove mobile’s effectiveness in driving ROI and brand equity lift, then one can understand why FMCG brands have lagged behind other sectors.

Changes are afoot

Despite these challenges, there is little doubt that mobile presents bountiful opportunities for FMCG brands, both in terms of the introduction of higher-spec phones along with the further penetration of mobile phones in emerging markets and the developing world.

Unilever has undertaken some of its most celebrated mobile advertising using mobile video for brands like Lynx and Dove, while Coca-Cola used video to help it scoop the first-ever Mobile Grand Prix of the year at the Cannes Lions festival for its Hilltop Reimagined ad, a contemporary take on its classic 1971 ad.

Sonia Carer, head of digital Europe at Mondelez International, says: “The better the experience, then the more branding opportunity within that platform. Video continues to be a key element within our marketing, and we are always evaluating how to adjust our content for new devices.”

Likewise, Nigel Gwilliam, consultant head of digital at the IPA (Institute of Practitioners in Advertising) believes the evolution of mobile phones will provide manna from heaven for FMCG marketers. 

“FMCG brands are more predisposed to storytelling and engagement using rich interactive experiences that increasingly leverage social,” says Gwilliam. “Smartphones, already near ubiquitous and inherently social, will continue to benefit from higher specifications and connection speeds providing even better platforms for display advertising, particularly video.”

Winning strategy

Outside of the affluent Western markets, mobile marketing is crucial to advertising its wares for companies like Unilever.

According to a recent UN report, six of the seven billion people on the planet now have mobile phones, fuelled by the skyrocketing adoption of mobile phones in developing markets.

“Mobile is incredibly important to us, as it enables us to reach people in remote places where there is no TV,” says Unilever’s Altschuler. “In countries such as India, which have vast areas with electricity for only two hours a day, there’s no TV – but there are mobile phones. And that’s the means through which we can reach those consumers.”

Tripodi is determined to get Coke to his goal of mobile marketing making up 20 per cent of overall marketing spend over the next two years. Where that spend will come from will be the key question.

TV is still the big awareness driver for FMCG brands and Tripodi says television will still be important to Coca-Cola as time goes on.

Like many big FMCG companies, Tripodi would like to switch money out of his paid media, such as TV advertising, and into owned media, such as mobile apps or the Facebook fanpage.

“Fundamentally I see a lot more shifted into the earned, owned and shared and out of paid side,” he says.

And, should Mondelez’s tie up with Google prove successful, similar deals could follow, particularly if improved standards of mobile effectiveness are introduced.

Altschuler is confident that this will happen. “We are working with the MMA right now on a methodology we believe will set the industry standard on this,” he says. 

Coca-Cola may have found itself lagging but one only has to look at how historically Coke’s slick marketing has rendered its few failures – such as its aborted attempt to launch Dasani water brand in the UK – mere footnotes.

Some FMCG brands may have been slow to innovate in mobile, but they’re waking up. And, given the marketing muscle they tend to have in-house, you can expect this vertical to get competitive in terms of mobile marketing activity in the near future.