Coca-Cola Has Halted Marketing Due To Poor ROI

It’s surely a sign of the times when Coca-Cola – that great luminary of brand marketing – has this week decided to pause their brand marketing because they believe brand investment is of “limited effectiveness” whilst the world is in lockdown due to the Coronavirus Crisis. Interestingly, they aren’t entirely ceasing marketing, they’re just moving some of the spend to digital marketing.

On the 21st April 2020, Coca-Cola’s CEO James Quincey spoke with investors after the release of the first-quarter results. He told investors that the global super brand has experienced a “significant and profound impact” to trading due to the global COVID-19 Crisis and one of the big announcements what that the advertising giants would be pausing most of its marketing activities. Coca-Cola’s global volumes have reportedly dropped by 25% since the start of April.

Quincey said: “Many markets are taking a pause as we focus on communities and other priorities.”

The company has decided to hugely reduce their marketing spend because their data suggests its marketing activities during the lockdown phase of the Coronavirus Pandemic has only “limited effectiveness”.

“We have determined that in this initial phase there is limited effectiveness in broad-based brand marketing. With this in mind, we have reduced our direct consumer communication, paused sizeable marketing campaigns through the early stages of the crisis and will re-engage when the timing is right,” explained Quincey.

This is an interesting time of the signs. Most food manufacturers and producers of FMCGs appear to be stepping up their marketing activity, with many of them using the traditional argument that times of economic downturn is exactly the time to step up marketing and advertising activity.

I also think it’s interesting that Coca-Cola isn’t saying they are completely stopping their marketing activities, just pulling back on their brand marketing and focusing more on online marketing – and brand marketing is more expensive than digital and always gets worse and less tangible ROI. In fact, Quincey has said that digital is performing well for them.

Big brands have a degree of inertia associated with their activity and when you’re talking about a brand that’s been leading the brand space for over 100 years, you can be assured they do certain things in certain ways because that’s the way they’ve always done them. This could just be the ideal time for them to take stock and review their activity. This could also signal a trend in the way the company will move its marketing activity in the future. I expect to see much more of Coca-Cola online in part because of the reaction to the pandemic.

Quincey argues the company “will embrace the seismic consumer shift to ecommerce and we believe that this acceleration is sustainable.” He went on to say the company is planning for a three-phased response to the Coronavirus Conflict whilst also saying it’s too soon to know exactly how the company will respond, saying: “there are lots of things ready to roll against different things coming out.”

Concluding about the outlook of the 128-year-old business, Quincey said: “We’ve been through challenging times before as a company, and we believe we’re well-positioned to manage through and emerge stronger.”

 

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