BATAVIA, Ohio (AdAge.com) -- He's been a fast-talking auctioneer, miner in the Australian outback, an Australian-rules football player and a hot-dog-stand operator. But Tony Palmer's toughest job may be steering Kimberly-Clark Corp., a marketer of products facing stiff private-label competition, through a recession.
When he became Kimberly-Clark Corp.'s first CMO nearly three years ago, Mr. Palmer had a mandate to build out a global marketing-services team, as long as he could pay for it through improved return on investment on outlays that now exceed $500 million globally.
He also set about reinventing the company's marketing for the 21st century, making integrated-communications planning a cornerstone that's been leading away from its traditional reliance on TV.
Integrated-marketing planning, a system he's helped implement in the U.S. and globally, leads almost inevitably there in many cases, Mr. Palmer said. But he's a long way from giving up on TV, expecting it to play a key role in big product launches next year. Despite data showing K-C cutting media spending in the U.S. in the face of recession and profit pressure from foreign currency last year, Mr. Palmer tells Ad Age spending is up globally and that the company has no plans to pull back.
Ad Age: How has the recession changed how you market?
Mr. Palmer: We're continuing to invest in our brands and our people. That's the only way you're going to win. We increased our investments in advertising and promotions by [nearly] $100 million [last] year. And we're planning to continue investing.
Ad Age: But TNS data show K-C cut measured media spending quite a bit in the fourth quarter and by double digits for the year in the U.S. How is that?
Mr. Palmer: Where we look at our full-year measured media in North America, we see an 8% decline.
The fourth quarter was a bigger decline [than that]. But that's the way the programs fall.
For commercial reasons, we delayed communications on the recent launch of our Depend underwear for men and women. You could have obsessed about the quarter and tried to spend it in the fourth quarter of last year, but it's the wrong thing to do.
But that's also measuring a very small proportion of the total business. Our [developing] markets are up about 18% through '08 [from 20% of revenue in 2004 to 31% today].
We will continue to grow our [marketing intensity] by increasing our strategic marketing spending at a rate greater than sales. [But] sales are growing more slowly for everybody than they were two years ago.
Ad Age: Will you keep moving away from TV?
Mr. Palmer: We've got big new-product launches coming next year where I'm sure we're going to up the ante on television because we're going to shift from well-established brands that are well known ... so we could see a little shift back. [But] we're moving as fast as anybody toward a broader array of media in our commercial programs. In part it's a little because specifically our brands -- in feminine care, baby care, adult incontinence -- are in places that are a little more intimate, so some of the alternative contact points are probably even more valid.
Ad Age: How fundamentally do you think the consumer mindset has changed just since September?
Mr. Palmer: Frugality is the new conspicuous consumption. Consumers are very clearly managing their budgets.
Today consumers are trading off between categories. In the Czech Republic, consumers are trading out restaurant meals to buy things at home. So maybe Huggies should be talking about for the cost of a restaurant meal, you can buy two months of Huggies.
Ad Age: Private labels are gaining share in your categories. What does Kimberly-Clark need to do about that?
Mr. Palmer: If you are truly giving consumers value for your brands, private label shouldn't be a real threat. What you need to do about it is...investing in your brand and giving your consumer a reason to buy your brand.
Ad Age: ROI was a big part of your mandate going in. You had the charge of offsetting the cost of the central marketing function with savings. Have you done that? And how are you measuring the ROI?
Mr. Palmer: We haven't built a huge central function, so that return on investment hasn't been hard to justify, frankly. But the bigger question is the return in investment on our marketing. We're using equity measures that clearly correlate to sales and margin growth.
The issue we're really trying to solve is that marketing-mix modeling is a really good metric in the short term. Brand equity is a good metric in the long term. And we're ... careful to manage that balance.
Ad Age: You've talked a lot about integrated marketing planning. How has that changed what you do at Kimberly-Clark?
Mr. Palmer: [We] understand the promise of the brand and [make] sure we've got a powerful promise that's relevant to our target audience. [You have] ... everybody looking at this from the same perspective. From there you can understand ... where to connect with the consumer.
Ad Age: Do you see any emerging media as a killer app right now?
Mr. Palmer: The whole idea of integrated-marketing planning sort of kills the killer app idea. I do think blogging and understanding what's going on with Twitter and being in a position to interact with consumers and track what they're saying about you online is an opportunity to build relationships and to understand what's going on with your brands.
Ad Age: We tend to think of social media and word-of-mouth as being effective for cars or electronic gaming or TVs, but what are the chances marketers in categories like toilet paper and feminine hygiene can create the same levels of engagement?
Mr. Palmer: [ScottCommonSense.com] has a loyal consumer base of 600,000-plus strong ambassadors of the pragmatic brand, who routinely on their own accord engage in word-of-mouth outreach efforts to communicate their affection for the brand. ... Huggies Pure & Natural diapers ... launched its website and within the first four days received over 200,000 requests for free samples. This was without the brand launching any proactive online outreach, and was completely based on word of mouth from moms.
Ad Age: Has the current economic environment made you more or less willing to take risks as a CMO?
Mr. Palmer: Definitely more willing. The environment is less predictable and therefore the risks associated with being different are less predictable and therefore higher. The rewards are also bigger. Now is not a time to retreat. It is a time to be bold, even more disciplined and willing to continue to act in the best interest of the company.
Ad Age: What's keeping you up at night?
Mr. Palmer: I am partnering with my colleagues in looking at driving efficiency throughout the organization by changing the way we work around the globe to give K-C faster and better decision-making processes and provide better, more meaningful jobs. That means work will change and jobs will be impacted. This keeps me up at night, but I have to remind myself that the right thing to do is not always the easy thing to do.