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Deep Dive 21 Jun 2021 - 6 min read

The $7bn question: Nestlé’s new global lead for media integration on data, personalisation, DTC and in-housing strategies, and why over-reliance on big platforms is dangerous

By Paul McIntyre & Brendan Coyne
Antonia Farquhar, Nestlé

Sydney to Switzerland: Nestlé's Antonia Farquhar says "when we stopped segmenting data via brands, and broke down the silos, we started winning – and could feed the data back into personalisation programmes.

Global CMO Aude Gandon is shaking up Nestlé’s marketing function. With change in the wind Antonia Farquhar, ANZ Head of Media, Content and Data, is swapping Sydney for Switzerland and the $7bn global media gig. Over the last nine years, she’s overseen a strategic shift in Nestlé’s first party data push; helped launch its first retail outlets; honed personalisation strategies via direct-to-consumer channels and launched a hybrid in-house agency. Now as cookies die off, she's aiming to ensure Nestlé does not become reliant on any one platform. But Farquhar is happy to invest more for quality that delivers higher returns.

What you need to know:

  • Nestlé’s data is delivering sharper results after flipping from a brand-by-brand approach to a cross-brand segmentation strategy.
  • The data gleaned is also feeding its approach to personalisation - names on Milo tins has proven hugely successful and ongoing. 
  • Incoming global media lead Antonia Farquhar is a big platforms proponent but thinks digital marketers neglect ‘legacy’ media and full funnel strategies at their peril.
  • Farquhar is also investing more in second tier social platforms – the likes of TikTok and Snap to avoid over-reliance on the likes of Facebook or YouTube.
  • She agrees with Unilever media counterpart, Sarah Mansfield, that cross-media measurement is urgently needed and hopes Project Origin takes off.
  • This year Farquhar set up a hybrid in-house agency via WPP’s Hogarth to be “more editorially-minded”, i.e. less polished but more nimble and culturally ‘in the moment’.
  • But she says Nestlé’s big creative agency partners have nothing to fear.

We've got to try new platforms in new ways to make sure we're not overly-reliant on the same platforms and media channels that we currently rely on.

Antonia Farquhar, incoming Global Media Lead, Nestlé

A couple of years ago, Nestlé’s local data strategy, like its broader marketing strategy, was centred around individual brands. But Farquhar quickly changed that – and the results have borne fruit. Now she is swapping Sydney for Switzerland.

“The power of our data is actually not segmenting it by brand. People shop across the range of our products … so segmenting people more around their life stage and their preferences gives us a much richer opportunity to communicate with consumers,” she says, “and a lot more depth.”

A cross-brand data approach has seen “engagement rates increase significantly, while also increasing our total first party data as well,” says Farquhar. “Which is the point.”

It’s a win-win: first party data feeds the marketing machine, reducing reliance on the second and third party data that was eating into marketing budgets.

The approach has also led Nestlé to produce “richer content… with a lot more value for the consumer,” adds Farquhar, and from that combination, “we’re seeing more meaningful results”.

Milo is a standout example, with Nestlé lifting shamelessly from Coke’s playbook.

“Last year we did a personalised tin, where you could put your own name on the tin of Milo for Christmas as a gift. From that direct-to-consumer piece, the majority of revenue, the actual sales results, came through people that were already engaged within our first party data – either via the website or opting in to a Milo email,” says Farquhar.

“So we're seeing the effectiveness come through with actual results – and that gives us a lot more confidence to invest further in this space.”

While Nestlé had tried similar things in retail before, it was the first time it had gone direct-to-consumer from its own website. Farquhar also gives Facebook a wrap for helping to drive reach, amplify engagement and prove the results.

She won’t say how many personalised tins of Milo the venture sold, only that it was “very successful … so watch out for it again”.

 

Experiments in retail

Nestlé and Farquhar have also taken personalisation into physical retail, with KitKat ‘Chocolatories’ in Melbourne and Sydney adding weight, were any needed, to Byron Sharp’s theories around mental availability.

“The stores are never going to replace retail channels. But it’s a way of us being able to incubate highly valuable innovation concepts and products that are really differentiated and personalised,” she says.

“You can choose the type of chocolate you want, the different types of flavours you want on that bar, the packaging, you can put a name on the box as well. So it’s becoming a real gifting occasion, and it gives us direct insight into how consumers behave. When we are doing product innovation, what a great opportunity – to have our own store.”

Meanwhile the stores are also acting as brand builders and revenue drivers in their own right.

“It’s a testament to success that the stores around the Chocolatories are some of the highest grossing stores for our classic four finger KitKat. That tells you that the experience obviously helps keep the brand top of mind and increases that awareness and consideration,” says Farquhar. “That's ultimately what we want.”

 

If Project Origin is going to allow advertisers like us to more effectively reach people, reduce wastage and increase the sophistication of media buying – that’s really what we’re going to need pretty quickly.

Antonia Farquhar, incoming Global Media Lead, Nestlé

Measurement: urgently required

Nestlé spends north of US$7bn a year on advertising – and Farquhar says better measurement is urgently needed. She flags Project Origin, the cross media measurement project championed by her global media counterpart at Unilever, Sarah Mansfield.

“I was listening to Mi3’s podcast about Project Origin in the UK – and I think that’s the challenge. If [Origin] is going to allow advertisers and brand builders like us to more effectively reach people, reduce wastage and increase the sophistication of media buying, that’s really what we’re going to need pretty quickly,” she says.

“The cross-media measurement is the missing part at the moment to pull it all together.”

Media metrics are indicative but they are very, very soft. So we’ll always go back to what’s actually driving business results. That’s where I think Media Mix Modelling and brand health tracking are key at the moment.

Antonia Farquhar, incoming Global Media Lead, Nestlé

Market Mix Modelling

In the meantime, Market Mix Modelling (MMM) is Nestle’s best proxy across key brands. “It really helps us understand short and long term ROI – it’s super important to look at both,” says Farquhar. “We’ve been around 150 years and we’re building for the long term… So that’s one part we use to measure all of our different channels and the different tactics within those channels as well. That includes everything from sampling, to stories on Instagram, to a 15-second ad on TV.”

Nestlé is also a big believer in brand health measurements, tracking things like ‘brand I love’ or ‘brand I prefer to buy’; over a long-term basis.

“Just keeping those constant measurements in place, doing them on a regular basis versus a one off dip, allows is to be as sophisticated as we can in measuring the impact of our communications,” says Farquhar.

Media metrics may be “indicative”, but they are “very, very soft”, she adds. “So we’ll always go back to what’s actually driving business results. That’s where I think Media Mix Modelling and brand health tracking are key at the moment.”

 

Data costs rise as cookies die?

While the end of cookies is nigh, Farquhar says Nestlé is not unduly concerned.

“If I was working for an insurance or clothing company that heavily relies on retargeting, I'd be panicking about what my new activation would look like in market,” she says.

“But we're in the business of really building brands for the long term and just keeping top of mind – how can I remind you to enjoy that brand and its attributes better? We're about effective reach and frequency and staying top of mind.”

However, for certain brands and categories Nestlé does lean more heavily on targeting, and Farquhar worries that the loss of cookies could lead data costs to rise to the point of diminishing returns.

“There will be a tipping point. If the data costs increase significantly [along with] the associated tech costs, there will be a point where the ROI just isn’t there.”

She points to infant formula by way of example, where the target market in Australia may be a couple of hundred thousand buyers in any given year.

“For stuff like that… it’s worth ensuring you are as targeted as possible,” says Farquhar. “But there’s also a flip side, which is priming people. You need to be talking to people years before they have a baby, so that you’re building brand trust for the long-term through more traditional screens – and then maybe use digital platforms to do more targeting to that particular audience at that life stage”.

 

There is a concern that with the loss of cookies that we may become more reliant on one demand-side platform for example, versus another. For me that over-reliance on one platform is a real watch out.”

Antonia Farquhar, incoming Global Media Lead, Nestlé

Platforms: eggs in different baskets

Under Farquhar, Nestlé will continue to invest a chunk of its media budget into the big social media platforms, Facebook and YouTube.

But she indicates that the emerging platforms, the likes of Snap and TikTok, may get a bigger cut as Nestlé explicitly reduces the risk of becoming dependent upon any single party.

“We've got to try new platforms in new ways to make sure we're not overly-reliant on the same platforms and media channels that we currently rely on,” says Farquhar.

“There is a concern that with the loss of cookies that we may become more reliant on one demand-side platform for example, versus another, because you can control your reach and frequency more effectively through one, versus having two-plus other buys on top of that. For me that [potential] over-reliance on one platform is a real watch out.”

 

What publishers can bring is that editorial mindset and that cultural currency that you can't get from just investing in platforms like YouTube and Facebook.

Antonia Farquhar, incoming Global Media Lead, Nestlé

Can legacy media compete?

Outside of the big tech platforms, ‘legacy’ media still holds significant value for Nestlé says Farquhar, who thinks publishers and broadcasters have “come a long way” in the last few years.

“What the publishers offer is that real cultural currency, so you have to be – and you want to be – in and around what’s happening. That’s a huge opportunity for brands like ours.”

A recent example is Starbucks by Nespresso last year partnering with Nine and The Bachelor.

“That was to get into a different, slightly younger audience, and get people seeing and talking about the brand, because it was a launch. To me, that sort of stuff is irreplaceable. You have to keep that top of mind integration … versus always relying on that highly targeted piece as well,” says Farquhar.

Yes, there's a battle in terms of investment across those areas. But what publishers can bring is that editorial mindset and that cultural currency that you can't get from just investing in platforms like YouTube and Facebook.”

While she acknowledges working with multiple publishers to achieve scale can be onerous for global brands, Farquhar says some publishers have the breadth, depth and data acumen to reward additional effort.

She cites News Corp as a standout example.

“I think [News] are a real key player in this area. They've put a really good data play together and they're always someone that we would include if we were to do a data partnership,” says Farquhar.

“Looking at the demand moments, what's the size of the audience, it's always fairly sizeable. You know that you're going to be around editorial and content that is associated with areas that we feel are more premium. So absolutely, I think they're a key player in terms of their reach and their sophistication – and what they're doing in this space absolutely for us makes sense.”

Those kind of publisher partnerships may also cost a little more in pure reach terms. But, “you get what you pay for”, says Farquhar, citing another Mi3 podcast outlining the much higher impact of quality digital content.

“If you're going to invest a little bit more to be around content that is higher quality – and it pays back – then absolutely it's worth the investment.”

We’ve shot some recipes in our own kitchen downstairs to be honest – we needed something quickly turned around for Maggi to do with Lunar New Year, and that was done within 48 hours.

Antonia Farquhar, incoming Global Media Lead, Nestlé

In-housing: an “editorial” approach

Farquhar is also taking the best bits of legacy media and attempting to embed them within her own operations.

Nestlé found new agility during Covid, when major production had to shut down for extended periods. “We needed to be out there really quickly, letting people know that our brads were still in stock – and we found new ways of doing this and a really good response for our brands,” says Farquhar.

“I wanted to make sure that we didn’t lose the essence of having that more editorial mindset and doing work that was not 100 per cent polished,” she says. So this year, Nestlé set up a local content studio on-site staffed with multitalented agency people – AKA “slashies” – from WPP-owned Hogarth Worldwide.

“They are essentially part of our team and they all have multiple skills and roles. So they’re able to quickly connect with the brand teams about what content they need – and then shoot it,” says Farquhar. “We’ve shot some recipes in our own kitchen downstairs to be honest – we needed something quickly turned around for Maggi to do with Lunar New Year, and that was done within 48 hours.”

Other in-house work can be a quick voice over adaption from global work, as well as social media production. The in-house team is in “pilot phase” this year, says Farquhar, but four months in, the signals are positive.

“So far, the team is extremely busy. It’s a great sign that the model is starting to work.”

Ad agencies: breath easy

However, Farquhar says she can’t see in-house teams displacing agencies any time soon.

“For us, it’s about having that speed, efficiency and editorial mindset – how can we respond to what’s happening culturally, get our brands talked about and remain relevant to what’s happening?” she says. “But it’s that faster work, more short-term thinking, not completely polished.”

That leaves the ad agencies free to do what they do best, and Farquhar is unequivocal about their value to Nestlé.

“The major creative agencies still have a hugely important role for our brands. They are the brand guardians. They are globally aligned agencies and they do that really high strategic thinking for the long term,” she states.

“The future of creative agencies and our brands is super important. The content studios fulfil a different need, because the amount of assets needed has increased significantly over the last couple of years. It’s really just keeping up with the pace of that change.”

 

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