What you need to know:

• The world’s largest advertiser, Procter & Gamble now directs more than 50 per cent of its $8.1bn global ad spend into digital channels.
• Coca-Cola CEO outlines centrality of digital to global campaign executions, and reveals the results
• Unilever develops 29 digital hubs around the world to build and share expertise, while breaking down information silos – but says ecom growth slowing as consumers return to stores.
• At Pepsico, there was an oblique reference to digital, but the company is now almost at the half way mark of a five-year digital transformation program.

Six years ago the Procter & Gamble fired a broadside at digital advertising. “We have a media supply chain that’s murky at best, and fraudulent at worst,” said P&G CMO Marc Pritchard.

But the world’s biggest advertiser has since become comfortable, now spending half of its $8.1bn ad budget on digital, according to CEO Jon Moeller.

It is doubling down on digitisation across the business to “drive consumer and customer preference, reduce cost and enable rapid and efficient decision-making”, per Moeller.

He stressed the need for increased digitisation on manufacturing lines and flagged investment in AI and blockchain. “They are tools we can use to delight consumers and customers at the most reasonable cost possible.”

Chief Financial Officer Andre Schulten said the company’s increasingly digital media strategy is paying dividend.

"We have delivered significant productivity over the past years, but we have reinvested all of that productivity and incremental media spend ahead of sales leverage, ahead of the productivity numbers even that we generated,” said Schulten. “And that productivity continues to strengthen.”

He said the firm’s improved targeting capability across both TV and digital is delivering budget efficiencies:

“Our ability to improve the effectiveness of reach, and quality of reach is allowing us to drive cost per effective reach down both in digital and in TV," per Schulten.

He said reopening of stores in most markets alongside stronger digital capabilities is resulting in “progress … but it is still relatively slow because mobility is only just reopening.”

Unilever, however, is seeing a stronger impact from the shift back to physical environments. CEO Alan Jope backed its network of 29 digital marketing hubs to drive growth – but said the rate of ecom gains had slowed as people return to stores post-pandemic.

He told investors: “We saw faster growth in B2B and more modest growth in B2C as consumers in some markets return to physical stores, though often after searching online and purchasing offline.”

However, digital commerce now represents 15 per cent of Unilever’s vast $US64B turnover, up 23 per cent compared to 2021 and Jope said digital channels will remain a key source of growth for the business which owns brands such as OMO, Rexona, Dove and Ben and Jerry's.

He also noted that the company is seeing rapid changes in the landscape as different channels and different models compete for consumers’ attention and spending. That has driven a major investment in the commercial and technical infrastructure to ensure it can execute effectively – including the 29 hubs.

“We’ve invested in 29 leading edge digital marketing, media, and e-commerce hubs. We call them our DMCs. They’re aligned to our five business groups, and those DMCs comprise experts in media, in data-driven marketing, in content excellence and sales capabilities, and they will ensure that we deliver seamless consumer experiences and optimise our investment across all channels.”

The network of hubs is overseen by Asli Kolukfaki, Global Head of Digital 4 Growth & DMC, who reports into Conny Braam, Unilever's Chief Digital and Commercial Officer. The Australia and New Zealand hub, based in Sydney is run by Sarah Sorrenson. It officially opened at the start of January this year.

“We’ve really beefed up our digital capability with these digital marketing centres, " Jope said.

However, shifts within digital channels are throwing up new challenges. The explosion of retailer media networks in the US – with retailers selling their audiences to brands both on their own digital properties and off-network, by enabling targeting of their buyers around the web – is becoming a major headache for big FMCGs already grappling with fragmentation and cross-media measurement.

Unilever has repeatedly urged retailers to adopt a set of unified measurement standards – but as yet to no avail.

Coca-Cola CEO James Quincey threw the kitchen sink into explaining just how central digital has become to major campaign activity, referencing everything from voice activation and QR codes through to sophisticated data analytics, and almost inevitably, the metaverse.

“Throughout 2022, we saw many examples of harnessing our enhanced capabilities to win locally," said Quincey, before unpacking a slew of activities to illustrate how the company is using digital to drive physical engagement and sales globally:

• Social media: In Vietnam, a month long Coke is Cooking campaign in October designed to help drive traffic back to stores involved digital support by local influencers. This was the first time Coca Cola used an on-ground event as a commercial asset, creating a social and digital content generator. "The campaign resulted in more than one million combo transactions and 20 per cent uplift for participating merchants," per Quincey.
• Metaverse and live streams: In Latin America, it used a live music strategy across in-person and digital experiences. The company partnered with Rock in Rio, which Quincey described as one of the biggest music festivals in the world, to encourage consumers to access content in the metaverse and through livestreams. "As a result, we boosted our reach for approximately 700,000 attendees to more than 45 million consumers across the region, and our sales inside the festival increased 23 per cent versus the last festival."
• AI and analytics: In India, he described the Thums Up Stump Cam as "...a never-before-seen activation for cricket fans."  Consumers scanned a QR code on product label to get access to exclusive match moments of the ICC T20 Cricket World Cup through a camera installed on one of the wickets. "Throughout the 45-day tournament, we used first-party data and artificial intelligence to send personalised content to consumers based on their favourite matches, and we amplified the experience through sports influencers." The campaign showed strong results, he said, with Thums Up growing volumes across Coca-Cola’s total sparkling portfolio in India during the activation period. Indeed it ultimately drove almost one quarter of India's total volume growth of the year.
• Voice-based branded experiences: In Germany, it used voice assistants to enable consumers “to learn more about Coca-Cola products and shop on voice assistant-enabled devices using only their voice,” per Quincey. He said the campaign delivered 11 million impressions and that “consumers engaged with this voice-based experience had a 25 per cent add-to-cart rate."

Pepsico

Pepsico included only an oblique reference to digital in its earnings call with analysts, but that passing reference masks a huge amount of activity at the company: It spends an estimated $1.89bn a year on information and communication technology and it is halfway through what it describes as a five year digital transformation journey.  

The company hired Athina Kanioura as its first chief strategy and transformation officer in the middle of 2020. She previously worked at Accenture as where she was the chief analytics officer and global head of applied intelligence.

Kanioura thinks artificial intelligence could power significant gains at Pepsico. Speaking on the Next in Commerce video blog late last year she described the practical way technologies like AI manifest in digital transformation.

“If you break down of every single product to the attributes of the product – the ingredients, what we call the source DNA of a product, [the] product comprises of 20 to 30 major attributes?

“If you look at the combinations of each of the attributes, we are talking about millions of combinations. It could be the packaging and the labelling and the grams that you have within the packet, and the different flavours and ingredients that you have. These are all attributes. So what we say is, how can we automate this process when we create a new product? Is there a way that we do a synthesis and optimise those attributes in an auto-AI way.”

As an example the company has been able to reduce the time to innovate and develop a new Cheetos product from as much as nine months to six weeks. “In our case, we managed to contain up to six weeks and this is something that we are now industrialising [for] many of the products.”