Coke Says Agency Roster Cut by Half

Beverage Giant Touts New 'Open Happiness' Global Push as an Example of Media Efficiency

By Natalie Zmuda
Published: February 12, 2009

NEW YORK (AdAge.com) -- Coca-Cola told investors today it is delivering on its promise to find marketing efficiencies through a reduced agency roster and global campaigns.

Coke's 'Open Happiness' campaign is being leveraged across the world.

During the company's fourth-quarter earnings call, CEO Muhtar Kent said the marketer has slashed its agency roster by more than half. "We have consolidated our agencies," he said. "Agency numbers have gone down by more than half, and I think we have driven a lot of efficiencies in our marketing, our market research costs, in our marketing over the past 12 months."

Mr. Kent also highlighted the new "Open Happiness" campaign, which is being leveraged across the world, as an example of marketing efficiencies.

A Coca-Cola spokesman said the agency changes have taken place during the last 18 months and are ongoing. Just last month, the beverage giant winnowed its European roster from 20 agencies to four.

"We are always looking at how to improve efficiency and operational effectiveness," the spokesman said. "Further consolidation is always an option, if it makes sense for the business."

Last July, Coca-Cola announced plans to save up to $500 million a year by 2011 and identified marketing as an area of focus. At the time, the beverage giant also said any efficiencies realized would be reinvested.

In response to an analyst question about the decline in media rates, Mr. Kent said Coca-Cola will continue to evaluate the cost of media while ensuring that gross rating points remain "very healthy" around the world.

"I've personally seen in Russia where I have lived through these crises in the past, in the 1990s and in Turkey, Argentina, it's always paid off to ensure that you keep communicating with your consumers in the macroeconomic conditions [such] as the ones that we're living through right now," he said.

Mr. Kent also highlighted innovation within the company, announcing the launch of Vitaminwater 10, which will tout just 10 calories and use Truvia, an all-natural, zero-calorie sweetener. Already, the sweetener is being used in two Odwalla flavors and Sprite Green.

The company also plans to display its "fountain of the future" at next week's Consumer Analyst Group of New York conference. The fountain allows consumers to select from more than 100 branded beverage options and uses the same amount of space as a traditional fountain.

"We have been working on this as part of our innovation pipeline over the past couple of years, and certainly what we have seen so far is very encouraging, in that the consumer gets excited with the choice and with the flavors," Mr. Kent said.

Still, regardless of cost-cutting efforts and new innovations, Coca-Cola is not immune to the global economic downturn. It reported an 18% drop in fourth-quarter profit, along with a 3% decline in full-year profit. However, unit case volume grew 4% in the quarter and 5% for the full year, driven by strength in still beverages, such as juice, teas and water.

2 Comments

By William | East Rockaway, NY February 13, 2009 06:17:58 pm:

I personally think Coke's new "Open Happiness" campaign signature is fabulous. A statement about the happy and collective experience shared by Coke users everywhere, rather than some bull.... about the product.

Also glad to see that they are launching this campaign worldwide. But gee ... haven't we in global marketing and on Madison Avenue been saying this for over 20 years. "One brand. One voice. One look". Now more than ever! bcrandallnyc@aol.com

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By bren24rold | CAGUAS, PR May 27, 2009 02:29:07 pm:

I think that Coca Cola marketing is spectacular, fresh, original and innovative. Open Happiness is just another proof of it.

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