How Reckitt Benckiser Became 'Digital at Heart'
Getting brand marketers to buy into digital and social media wasn't always easy at Reckitt Benckiser, acknowledges Laurent Faracci, general manager-North American marketing. But the demonstrable return-on-investment -- critical for a company he describes as "cost obsessed" -- is now strong enough to easily get their attention and dollars. And it's transforming the marketing operation well beyond the media mix.
What Mr. Faracci describes as the movement to become "digital at heart" is affecting everything from the U.K.-based company's agency relationships to how it recruits marketers and works with retailers.
It played a pivotal role in RB's decision earlier this year to partially unwind its years-long consolidation of creative assignments with Havas in a global review that moved five brands, including Air Wick and Clearasil, to Droga5; Finish to Wieden & Kennedy; and Mucinex and Delsym (previously handled in-house) to McCann.
"We realized that what made a good decision maybe 10 years ago to go with one agency and consolidate every brand around the world into a single network, that was pretty much TV-led thinking, where every asset is very important and costly," Mr. Faracci said.
Not that every ad isn't still important, but growing reliance on digital ads requires more content, much faster. "We wanted to bring more diversity and creativity," he said. "We went to the market and explained that and saw what we believed were the best agencies creatively."
Havas, he said, remains "a great partner for us," one that "retains at this stage 85% of the business globally."
The agency move was a surprise given it paired a notoriously tough-minded client with new shops known for unconventional work. As Mr. Faracci puts it: "We are very data- driven. We are less soft and emotional than some of our competitors. We are much more about the business, being entrepreneurial, the data and getting it right, not necessarily getting it fancy or fashionable."
That said, he believes the new agency partnerships are off to a good start. "People are excited on both sides, and the work we've seen is great," he said. "It's a journey. We want to be a better client as well."
The data-driven part, however, won't be going away. Mr. Faracci sees that focus driving ever more spending to digital, where the company's marketing-mix analytics show it getting better returns.
While RB is doing more programmatic buying, the focus is on finding what creative and media placements drive behavior change, he said, rather than simply driving down CPMs.
Sometimes the goal with digital is simply to improve reach, as with a Lysol campaign. TV could only hit 48% of RB's target affordably, but adding Facebook allowed the brand to reach 65% of the target.
"Now that [social and digital] is becoming a mass medium, there will be inflation," Mr. Faracci said, noting that many social and digital companies are now public, meaning their financial performance is under greater scrutiny. "But I think they're producing results more organically than through price increases."
RB has placed its biggest digital bet with Facebook in an extensive partnership launched more than two years ago in the U.S. That pact recently grew into a nine-figure, multi-year global deal.
"We bet on them because of mobile," Mr. Faracci said. "And it turned out to be a winning bet. We make very few bets, but we go fairly hard with them when we do it."
The relationship with Facebook extends beyond the usual in media partnerships to include joint recruiting trips to schools such as New York University. "We explain what a great leaning-forward client can do in the context of a digital economy," Mr. Faracci said. "It shows us very differently than the CPG stereotype of doing TV and display."
Internally, he said, "Nobody today contests the value of Facebook," thanks to the ROI demonstrated by prior programs. "Nobody questions today in the organization the value of online video. Suddenly, you don't have to fight internally," he said.
Mr. Faracci terms it the "virtuous circle" of investing in digital, getting better impact and ROI, which in turn generates bigger budgets for more spending. Unlike some packaged-goods players such as Procter & Gamble and L'Oréal, RB has no interest in dropping the savings to the bottom line, he said.
But while digital may help marketing, consumer spending on technology may be slowing the CPG business this year, along with reductions in food stamps and the harsh winter, Mr. Faracci said.
"I believe the weight of technology and technology spending on real middle America is increasing," he said. "That takes a toll on net-available income as salaries stay where they are."