Monday, February 18th, 2013
As we TCTers know, Pepsico has been on a special mission to further boost its shareholders’ take from its operations. How do they do this? Why, by boosting and refining their investments, of course.
And what, precisely, does “investment” mean, in our age, at a mature profit demesne such as Pepsico? Marketing, of course.
Per Advertising Age:
Wondering if advertising works? Just ask Pepsico.
PepsiCo declared it would boost advertising spending across key brands, trim agency partners in the North America Beverage division and better leverage its global scale — while cutting costs and enhancing shareholder returns. The company is making progress, according to data from several sources, including PepsiCo’s annual financial report released last week. And importantly, when it comes to marketing, PepsiCo has put its money where its mouth is.
Hugh Johnston, PepsiCo’s chief financial officer, said the company has “absolutely” accomplished what it set out to in 2012 and is seeing improved brand-equity scores and an upward trend in market share.
PepsiCo increased measured-media spending in the U.S. by 24%, or nearly $130 million, in the first three quarters of 2012, compared with the same period in 2011, according to Kantar Media.
PepsiCo reported a 4% drop in full-year profits in part due to increased marketing spending. But fourth-quarter profit rose 17% as the spending kicked in. Pepsi also posted 5% organic revenue growth for the quarter and year.
“We not only stepped up the level of investment in advertising and marketing, but we took steps to improve its efficiency and effectiveness by better leveraging our global scale and driving consistent brand positioning and coordinating advertising, creative and production activities,” said Indra Nooyi, chairman-CEO of PepsiCo, on a call with analysts.
Clearly, all this is something only the magic of the private sector could accomplish. How very lucky we all are!