Unilever looks to advertising for cost savings as coronavirus slows growth

Unilever is stopping major advertising production and exploring cheaper media in a bid to make savings during the Covid-19 pandemic.

The FMCG giant’s chief executive, Alan Jope, told investors on a call (23 April) that the company would be halting the production of major ad campaigns and “reviewing all spend to be effective”.

Part of this review is a shift in spending from outdoor and other areas affected by the crisis and “dialing up areas with strong ROI” such as Unilever’s skincare business, as well as “rapidly upping communications” in areas such as household – where sales rose by 2.4% during the first three months of 2020.

Jope noted that costs are “swinging around wildly”, including media rates plummeting so brands can attain reach at a lower cost.The company has seen a surge in sales of hygiene and food products, but has taken a hit to its food service and ice cream business during the first quarter of the year, as people stay at home during the global lockdown.Unilever noted it was preparing for “lasting changes” in consumer behaviour as it assesses the impact of the pandemic on spending.

The company noted four key changes so far.

• Firstly a sharp rise in purchases due to stockpiling in March, although Jope was quick to note “stocking up patterns is a change in buying patterns rather than increased consumption.
• Secondly, an increase in consumer spending when it comes to home cooking and household items as people stay at home and clean more.
• Thirdly, a decrease in hair washing, styling and deodorants, and lastly channel switching from offline to online. In China, Unilever saw online sales grow by 34%, while offline sales were in double digit decline.

“We are adapting to new demand patterns and are preparing for lasting changes in consumer behaviour in each country, as we move out of the crisis and into recovery,” Jope added. “Unilever is built for times like this. Many of our countries have a track record for managing crises where we’ve shown not just our ability to manage a crisis, but also coming out with a competitive edge. We will emerge from this crisis well positioned for the future.”

Last week, rival Procter & Gamble said it was “doubling down” on marketing in the face of growing global demand. CFO Jon Moeller said the Covid-19 pandemic was the right time for P&G to “remind” consumers of its brands and their benefits rather than cutting back on marketing spend.

The FMCG giant is halting major advertising production as it reviews all spending in a bid to make savings during the Covid-19 pandemic.