BATAVIA, Ohio (AdAge.com) -- Have digital and social media leveled the marketing playing field so much that scale is losing its power?
That this prospect has big marketers increasingly worried -- and smaller ones pleased -- was clear at the recent Association of National Advertisers conference in Phoenix. But while much evidence points to a leveling effect, plenty also points to scale remaining a powerful and even growing force in marketing.
Eek, a mouse!
Like the proverbial elephant scared by a mouse, many giants of marketing at the ANA conference were in awe of one of the tiniest marketers: Method. After Method co-founder Eric Ryan detailed how he had taken on the behemoths of package goods, he was the subject of about a dozen references among much bigger players at a CMO roundtable.
Mentions included this comment from General Mills CMO Mark Addicks, who has had Mr. Ryan as a guest at one of his own in-house training sessions: "If we can't leverage our scale, then we're vulnerable to a bunch of Eric Ryans," Mr. Addicks said, specifically in the context of energizing the large employee base of a company such as General Mills in social media.
Brad Casper, CEO of Henkel's U.S. business, closed the conference Nov. 8 with a thought that was either sobering or uplifting, depending on your viewpoint. "New media -- social media and digital -- has been the great equalizer," he said. "We still have big battles in-store to get the customer's attention and win our share of shelf. But I do believe we have a leveler playing field today. It's no longer just enough to look at [measured media] because there are so many things going on below the line ... that can be stealth and drive brand growth."
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Mr. Casper has lived both sides of the scale question. Henkel is a major player globally, but its U.S. business is smaller than the global P&G brand he helped launch earlier in his career as an executive there: Pantene.
He said he once doubted challenger brands could compete effectively but has changed his mind, in part because of personal experience. He has seen launches of Purex Natural Elements and Dial Yogurt body wash gain significant share despite significantly underspending competitors, he said, using launches heavy with PR, digital and social-media components.
Package goods provide mixed evidence but clear signs that both scale and paid media often matter. In recent years Henkel, Method and, in similar fashion, Colgate-Palmolive Co. have built or maintained share in categories such as as body wash, oral care or laundry against much bigger-spending rivals in the U.S. with relatively small paid-media budgets.
But two other highly successful players -- SC Johnson and Reckitt Benckiser -- have been gaining share with big measured-media outlays in the $400 million to $500 million range annually, the latter with very little digital media until this year, when it put 5% of its TV budget into online video.
Yes, industry heavyweight P&G has been broadly losing market share the past year or two. But no one doubted the power of its scale from 2003 to 2006, when it was drubbing smaller competitors by outspending them massively on media.
While P&G's slowing might be a sign of how that scale is losing effectiveness, the story is more complex. P&G's success forced competitors to restructure and apply savings to increased media support, which narrowed P&G's edge as it slowed spending.
Clearly, on the retail side, scale matters, as Walmart has spread its national media investment over a growing store base. It's also joining other retailers in cutting item assortment, a process analysts and suppliers believe will intensify next year.
Theoretically, that should help bigger players and their leading brands. Yet the two players who've most often said retailer assortment paring is likely to help them -- P&G and Clorox Co. -- also had organic sales growth below most industry peers last quarter.