17 Feb, 2012, Kala Vijayraghavan & Preethi Chamikutty
P&G, HUL, Vodafone, Cadbury Kraft and others turn to digital and social media to lure buyers
MUMBAI: When, in end-January, Robert McDonald, CEO of the Cincinnati-headquartered Procter & Gamble, announced plans to lay off 1,600 non-manufacturing workers, chief marketing officers (CMOs) worldwide took notice. After all, many of those 'overhead' jobs at the owner of billion-dollar brands such as Ariel, Tide, Pampers and Duracell, will be marketing ones. McDonald had good reason for the rather radical move: although marketing spends of the world's largest advertiser have gone up 24% over two years, sales haven't kept pace, hovering in high single digits. Instead, the CEO reckoned, P&G would be better off with digital and social media campaigns - on platforms such as Google and Facebook where return on marketing investment is more "efficient". McDonald used the example of the Old Spice campaigns that went viral on YouTube. P&G spends $10 billion annually on marketing, which works out to 9-11% of sales. That war chest won't contract, but spends will be biased towards digital marketing.
So does P&G's move signal the beginning of the end of conventional marketing with its ritualistic advertising and promotions - and of dyedin-the-wool marketers who are unable to ride the digital tiger? An IBM 'Global Chief Marketing Officer' study done in the fourth quarter of 2011 suggests that most CMOs worldwide, and in India, are "underprepared to manage the impact of key changes in the marketing arena". The study conducted among 1,700 CMOs globally, of which 99 are from India and Sri Lanka (ISA), revealed that some of the biggest shifts that marketers are ill-equipped to deal with are in social media and "data explosion". Some 68% of the international CMOs surveyed are not in a position to deal with the rapid developments in social media; that number climbs up to 78% in the ISA region. Data explosion topped the worldwide list of under-preparedness with 71% of chief marketing officersindicating so; in the ISA region, the corresponding number stood at 66%. Back home, nobody is heralding the decline of the traditional hotshot marketer, but the writing is loud and clear on the Facebook wall: "Marketers who cannot see the kind of influence and deep engagement that the digital space has with consumers may as well get out of business," says Santosh Desai, managing director & CEO, Future Brands.
"While experienced marketers are an important part of our team, grey hair is not the sole asset any more; you need to understand new media to be a good marketer today," says Anuradha Aggarwal, vice-president for brand communications and insights at Vodafone.
Aggarwal should know. Vodafone has been a relative high spender in the digital medium, with innovations like the ZooZoo apps. Traditional marketing spends in India still dominate, but slowly and surely a growing percentage of funds are being sliced out of budgets and being moved towards the digital space. Consumer-centric companies such as Hindustan Unilever (HUL), P&G, Vodafone, Cadbury Kraft and the UB Group are looking closely at cost-effective and engaging ways to connect digitally with consumers. Maruti Suzuki, for example, claims that 18% of its sales are seeded by digital marketing leads, a nine-fold rise from 2005. Mayank Pareek, managing executive officer (marketing and sales) at Maruti Suzuki India, says the percentage of pre-decided consumers spending more time on the digital medium is growing. "We have learnt to get comfortable using Facebook and Twitter to reach consumers. Digital is an integral part and not an add-on of any campaign," adds Pareek. To be sure, more and more chief marketing officers back home have recognised the need to use social media as a key engagement channel. But perhaps they just don't know how to go about the task.
For instance, the IBM study notes that most chief marketing officers are still fixated on understanding 'markets' instead of understanding 'individuals' when shaping strategies; that most CMOs are using data to manage transactions, not relationships; and that marketers are grappling with the challenge of integrating technology with marketing. "Our study showed that Indian marketers were more focused on promotions and events that create the buzz around the brands; but they do not go into understanding consumers ...chief marketing officers have to lead by example and should learn to blog, tweet and interact with the Facebook community," explains Virginia Sharma, director of marketing, strategy and communications for IBM Software in India/South. Adds Amit Syngle, vice-president for sales & marketing at Asian Paints: "Any marketer who wants to be relevant to the consumer needs to be updated about new technologies that influence consumer behaviour." Digital is still a small proportion of overall marketing budgets, but has moved from single digits to 10-15% at India's top marketers over the past few years, say industry officials. At HUL, India's largest marketer which strictly monitors its return on marketing spends, social media has moved to the centre of the plate, say company officials. Unilever's Marketing Academy is now taking every manager remotely associated with a brand through online social media courses. Recently, HUL organised a blogger's meet for its personal care brand Dove and coffee brand Bru.
Abhiroop C, head of media services at HUL, says social media is absolutely integral to HUL to tell the brand story and listen to what consumers have to say. "Consumers today are multi-tasking across mediums and we need a complete 360-degree plan to get our message across effectively. The biggest challenge for all marketers is not to treat social media just as an opportunity to show the consumer a banner advertisement. This is a medium where we must continuously interact with consumers," adds Abhiroop. P&G in India has begun hiring young candidates as community managers to handle social media marketing. Kainaz Gazder, P&G India's marketing director, says the company is leveraging "new-age touch points". The most recent example of such an initiative is the 'Olay Regenerist Wait List', an exclusive trial on Facebook even before the skin care product reached stores.
"We recognise that we need to be part of the community, not just an irregular visitor, and that's the role of our community managers," adds Gazder. Consumer product marketers point out that a combination of social media, a rash of technology applications and changing demographics has resulted in little differentiation between the role of a chief executive officer and that of a chief marketing officer. "We have to collaborate with other areas such as sales and customer service to understand the entire customer experience.
Employees too have to be converted into brand advocates. We now need to understand how to integrate mobile phones, social networks, tablets and gaming zones in our communication plans," says the CMO of a leading foods multinational.
Adds Neville Taraporewalla, director, Microsoft Advertising: "FMCG companies are looking at digital in a big way because the threshold of Indian customers on the Web is 100 million-plus and will reach 300 million in the next 36 months; this will be the largest population of Internet customers in the world."
The future clearly belongs to marketers keeping abreast of rapid change. As Vinay Bhatia, customer care associate & vice-president for marketing and loyalty at Shoppers Stop, says: "The fundamentals of marketing have not changed. But yes, the advent of technology has made it necessary to adapt to change. There will be a lot of stumbling, but the key is to keep trying new things."