The chance to peek into a marketer’s mind –
to glimpse at the key strategies he or she
is implementing, or dumping, over the next
12 months – is an opportunity few in
adland would pass up. This is especially true in the
economic downturn, where reports of significant
drops in ad spend and media owners struggling to
hit targets are all too common. And it’s even more
true – perhaps critical – when the marketers in
question control hundreds of millions of dollars.
Telstra, Reckitt Benckiser and Optus, whose
marketers all lend their thoughts in the following
pages, spent $138 million, $68m and $62m
respectively between October 2007 and September
last year, according to Nielsen.
All have had their media strategy shaped by the
onset of the downturn in various ways, which no
doubt will have an impact on the agencies and media
owners they partner with to create and execute
their plans. As B&T spoke to some of the biggest
spenders in advertising, a clearer picture also
emerged of where each of Australia’s mediums
stands in our troubled economy. TV proves to be the
stalwart, with marketers such as Amanda Johnston
from Telstra and Darryn Wallace from Schweppes
Australia insisting it will be core to their campaigns.
Digital continues its increase in ad spend, although
signs are that its stellar growth will slow this year.
Meanwhile, outdoor, radio and below-the-line
activity may find itself in muddy waters, with some
marketers unsure of whether squeezed budgets will
see spending in these mediums remain as strong.
Nonetheless, Australia’s key marketers are
facing the economic downturn with a mixture of
vigilance, bravery and an increased determination to
land the best deal from media owners and agencies.
Read on as B&T brings you insights from 10 of
Australia’s biggest spenders.
AMANDA JOHNSTON-PELL
Executive director of brands and marketing communication,
Telstra
Spending power:$160-$165m
What’s your marketing priority during the current economic downturn?
The way we’ve been operating the business since I started in July 2008 is focused around effectiveness and efficiency. We completed a marketing simplification project pre-October last year. A large part of that program really ensured that we were looking at the best use of people, resources, ad spend and channel to market. We are in very good shape in terms of that analysis and the work that we completed. I think the focus in times like this is really around measurability. Telstra will continue to be a multi-media advertiser, so the traditional mediums are important. But we will also continue to streamline our spend by segment. We’re starting to see search engine marketing, online marketing and mobile marketing play a strong role.
Which medium will you be prioritising?
This is a company that invests strongly (in marketing) as a lever for our market growth targets. The mix of media will adjust based on changing habits of customers. Mediums such as online, mobile marketing, messaging, one-to-one communication, communications to our existing customers – they become and will become even more important. But we have to be adapting as time takes hold. As we start to see more and more adjustments in media habits, then we will adjust our strategy accordingly. We still see traditional media as very important. When Telstra takes a campaign to market, we start with the customer and depending upon what segment that is, we drive our channels strategy based on that segment. TV, press and radio are still important channels in the marketing mix. What we see with TV is that it’s an important awareness-building medium, and often without it, we don’t get the intensity of the campaign that we require. So it will still play a strong role in the mix.
How will you be partnering with your agencies this year?
We’ve recently gone through a review of our account arrangements at the second half of last year. So we have, through the marketing simplification project, worked through the number of agencies and their contracted commitments to the Telstra business. Our focus continues to be to bed those relationships in and ensure that we’re doing the right dial set so together we can be delivering world-class work. Our relationship with our partners is always one where we are focused on the outcomes of investment, and so our lead agencies understand the culture of what we call “performance based management”.
MICHAEL SMITH
Corporate marketing director, Optus
Spending power: $80-$85m
Any changes to Optus’ media spend this year?
We see spending on marketing pretty consistent year-on-year, although we may refocus between brand and tactical a little. I do expect to see digital work increase in significance, as well as an even greater focus on existing customers in our one-to-one efforts. We have spent a very long time optimising our investment – so we’ll tweak more than take any drastic risks.
This year in particular, what are you looking for most from your agencies?
I look to both our agencies as partners. In tough years we will no doubt have a few more tougher discussions, in attempts to drive improved creative, better reach and higher ROI. In those conversations, it is really important that Optus and the agency group maintain the partnership as critical, because in this environment quality sometimes gets compromised for price – and that would be the very worst outcome of all.
What’s your marketing priority during the economic downturn?
As we head into 2009 the changes to our marketing strategy are subtle.
Telecommunications is a category that customers tell us they see as essential to their lives. It is as important as food. Our role at Optus is to help our customers find new and better ways to enjoy their food. One of the key planks is product innovation and pricing. On the other side of the equation, the subtle refocus this year will also be around brand emotion and engagement.
In tough times, people look to brands to do all those great product things, but also to be responsible, caring and engaging. Overall, while we always manage our investment in marketing according to our business performance, at this point we see little change in total effort.
What position do you think the Australian media communications industry will be in, in a year’s time?
Media will come out of the back end review with heightened accountability for investment. This trend had already started in digital, but the economy will accelerate this.
MARK REINKE
Executive general
manager of marketing, Suncorp
Spending power: $80-85m
What’s your marketing priority during the economic downturn?
Customer attention is very important at a time like this. It’s obviously much more efficient and effective for us to retain our existing customer base rather than continue to invest heavily in acquiring new customers.
Any changes to your media spend this year?
Overall, we are holding our level of marketing investment across our brands. I think we’ll probably move our mix between brands. But I wouldn’t expect that balance to change dramatically. If there are mediums that we don’t understand well or can’t measure well, then we probably won’t rely on those heavily. But all major mediums now, we can measure them much better than we did, so I don’t see any major step back from any particular category.
Free-to-air TV has represented the largest component of our media investment in recent years and that will continue. It does deliver very strongly for us, particularly in our insurance portfolio. Having said that, I do expect us to also do a solid investment in outdoor for both impact and targeted, local messaging. Online is an interesting one, our investment in online across our group has grown sharply over recent years. But I do expect the pace of that investment to start to moderate a little, because we’re starting to see areas which have driven online, such as search engine marketing, mature as pretty much every major brand saturates that medium. This means where the easy wins were in those mediums, they are no longer there. So I do see our investment online increasing, but not at the same pace as it has been.
What’s your strategy for 2009?
When we would typically look at our marketing programs, we might take 10 initiatives to a particular segment over a period of 12 months. What we are doing at the moment is to say let’s do less of those, but do them better. It’s not about creating noise in the market, it’s about building clarity.
FREDERIQUE HULL
Marketing director of household, Reckitt Benckiser
Spending power: $65-$70m
How is Reckitt Benckiser’s household category holding up this year?
We are seeing some slowing in the market, but having said that, we are in cleaners and dishwashers. You still need to wash your dishes at the end of the day. But we are seeing some slowing down.
Are you decreasing your media spend this year?
No. We have strong brands, we believe we have strong innovations coming out. We looked at all of the elements of the marketing mix to make sure that we think they are going to be good hitters, and therefore we’re not going to curve at the last minute on the investment. We’re just launching a product called Nurofen Advance. The budget for this launch is around $11 million. It’s pretty significant. Our media will follow where the consumers are going, so as a natural flow, media such as digital in particular is becoming more important. In terms of the impact of the downturn, it’s not having an impact on the channel mix that we’re using, it’s more we’re trying to get the best deals we can out of the media owners to make our dollars go as far as we possibly can.
What is the biggest marketing challenge of the economic downturn?
It’s a need to be aware on a monthly basis of what’s going on. We are having to relook at things faster and be more fluid in what we do, within the constraints of a trade that’s not changing. Previously we might have done a couple of executions on a particular brand and sold that on a copy rotation and that was fine. Now, we might need to change it because in three months it might not be the best message any more.
PETER WEBSTER
Divisional manager for national marketing,Toyota Australia
Spending power: $80-$85m
Are you decreasing your media spend this year?
The car market overall is down 20% odd in Australia. We’re probably doing better than most, but the market is down and consequently, our volume is down and consequently the profit for Toyota is down. I don’t think there’s any question that our media budgets will come down. You can’t spend the same amount of money as you were 12 months ago, sell 20% less product and go to the finance department and present an argument about why that makes sense. So there’s no
question that our spend will reduce, and it will reduce in line with our potential return.
Will any medium see less of your spend this year?
I think in our business, we’re not big spenders on outdoor anyway, but one of the areas of our business that will fall off and something we’re really looking at is our below-the-line and promotional activities. We’re reviewing sponsorships. The real challenge for marketers in this environment is to become much better at convincing boards that marketing is in fact an investment, not a cost. And as an industry, I don’t think we’ve been terrific at it. This is a time for the industry as a whole to start to come to grips with how they’re going to convince boards in the future, otherwise what will happen is you will simply be told your budgets are cut because you’re a cost, and not an investment.
Any new initiatives for 2009?
By 2020 there’ll be a hybrid version of every Toyota passenger car. So for us, a big priority is moving the marketplace’s understanding of hybrid as we prepare for what will be an inevitable major shift in car purchase. It will completely substantiate our position as leader in the future of hybrid technology.
JOE TALCOTT
Group marketing director, News Ltd
Spending power: $50m**
What are the biggest challenges during the economic downturn?
One of the first things that happens in a downturn is people start to make decisions on where they’re going to spend their money and anything in a category that’s discretionary gets evaluated. In our current environment, the definition of discretionary gets extended. People make decisions on whether they really need it. Many of our products would fall into that category. You buy a newspaper or a magazine, it would come into that category. As a result, you are battling a tide of “Is this something I can live without?”
So how are News Ltd’s products holding up this year?
It’s not down significantly according to readership. We’ve seen declines, but nothing like what has been seen in overseas markets.
Any changes to your media spend?
We’ll invest most, by far, in print, probably because we own a lot of that. The rest of our media mix I wouldn’t expect to change dramatically. We’ll also invest in television, radio and occasionally outdoor and online (we may also do a bit more direct marketing this year, but it’s not anything that would jump off anyone’s charts). What I do see is the level of our activities and what we’re doing changing. I anticipate that we’ll spend more money this year.
The caveat is we’re in the middle of budgets right now, so a decision hasn’t been taken. But with the job that has to be done, I believe that we’re going to have to invest more to get that job done.
HELEN FARQUHAR
Director of marketing, McDonald’s Australia and New Zealand
Spending power: $55-$60m
Have you made any changes to McDonald’s media spend?
It’s going up. Because we’re a growing business, we’re really investing back in the brand. TV always been our cornerstone and we continue to use that as a primary vehicle to drive awareness and engagement in the brand. We continue to be heavy users of radio, we’re using more outdoor to support key marketing initiatives and we are investing a lot more in the area of digital.
How is the New Zealand market affected by that country’s recession?
The business in New Zealand is performing strongly as well, not quite as strongly year-on-year as the Australian business, but they’ve been in recession now for five or six quarters. Australia should look to New Zealand to see the consumer trends and scenario plan around that. McDonald’s business is strong, it’s growing, but what we are seeing there is a heightened economic downturn and an even more value conscious consumer”
Where will McDonald's be in 12 months?
I think we’ll be stronger, but we'll be listening to consumers. We’ll be anticipating what they want out of us over the next few years. We’ll be continuing to evolve our menu over the next three years, we’ll have completed the roll-out of McCafe, we will have expanded the options that we provide through our drive-through service, we will have ridden out this economic downturn and we will have stolen even more share.
DAVID KATIC
General marketing manager, Ford Australia
Spending power: $60-65m
Are you decreasing your media spend this year?
While our budgets might be under pressure, because we’ve got so many launches this year, we’ve obviously being given the resources to ensure we do those properly. We do have a very big communication job to do this year. We think there’s a great opportunity to increase our share of the customer’s mind. We’ve got a new Focus, a new Ranger, a new Territory and we launched the FG Falcon last year. But I don’t think we’ll be increasing our media spend, that’s for sure.
Which medium will you be prioritising in your spend?
We don’t have a cookie cutter approach to vehicle launches where we say, “we’re going to spend 60% on TV, 20% online, 20% on press and that’s it.” It’s very much focused on the actual product, so with Fiesta, we did a really heavy online presence because that’s where the audience lives. We might have for a truck launch a more heavy, pay TV focus because we know that’s where those customers live and breathe. Radio is really effective for truck customers because when they’re working on the site, they’ve got the radio on in the background. I think you have to pick your winners.
Any new initiatives for 2009?
Society is demanding a lot more eco-friendly products, and as a manufacturer we’re working extremely hard on that. We think we’ve got a really strong green strategy going forward.
MARK BUCKMAN
Chief marketing officer, Commonwealth Bank of Australia
Spending power: $35-40m*
Any changes to CBA’s media spend this year?
We’re making less money on our products and services than we did in the past. While volumes might be holding up in terms of the number of people coming to us to get home loans, to borrow money on the wholesale market to lend people is costing us more. And as that number continues to go up, and as the cash rate continues to go down, the difference in the middle is bigger than it used to be. As we make less money on the products and services that we sell, I’m expecting that the media companies need to make less money on the products and services that they sell. I expect the media cost to be going down significantly. The media owners have been putting their costs up by high single digits, if not double digits for the past 10 years. They need to bear the downturn as well.
Which medium will you be prioritising in your spend?
I don’t see a major shift in our spend moving forward. Like many, we have increased our use and spend of the online channel over the last 12 to 24 months as our own capability has developed in the online channel. Television is particularly important for brand equity; print essential in terms of our retail communications; online in terms of its unique reach and transactional capability. We will continue to use outdoor for awareness on a selective basis. As we experience margin compression in our own business we will be looking to the media owners to bear some of that compression.
DARRYN WALLACE
Marketing director of beverages, Schweppes Australia
Spending power: $30-35m†
How is the beverages category holding up so far this year?
At the moment, it is faring really well. I think something we have to be vigilant about is if there was a reduction in frequency of consumption and people, particularly in an impulse sense, are choosing to drink less through affordability. One of the realities we have in our category is a reasonably strong private label business. It continues to grow, and so we’ve got to be as vigilant as ever in terms of our value proposition.
Will Schweppes be reducing media spend this year?
At this point, we’re not planning to reduce our media spend. We want to keep investing strongly, and the minimum of that would be in line with 2008. I do think, though, that with the media market being ever-evolving, our challenge is: are we getting the best value for the money we do want to spend, are we getting the right media deals? Our predominant media channel would still be free-to-air television. Within that, we continue to be more targeted in our media buying - buying more for designated TV programs. Around that, we still want to invest in digital, outdoor and experiential work .If we were to spend more, it’s definitely around firstly digital, and secondly brand and experiential work, a lot of that linked to sampling and the brand experience wrapped around that sampling.
