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 Table of contents

1. The future of FMCG.com.............................................................................................................................. 1

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Document 1 of 1

The future of FMCG.com

Author: Rosier, Ben

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Full text: Headnote

Online investment among FMCGs is soaring as they start to harness the power of the internet
Procter &Gamble and Unilever, the two giants of FMCG, practically wrote the book on modern marketing as
they built their brands around the world in the last half of this century. But now that rule book is being torn up
and revised. The new media revolution has the power and potential to change almost every aspect of how
businesses communicate and sell.
But how will it affect FMCG companies? How can the huge multinational marketing companies use the web to
benefit their business?
From the first, Unilever and P&G were early converts to the web. Unilever's Ragu pasta sauce brand was one of
the first FMCG brands to have an online presence, with the launch of the Mama's Cucina site back in 1995. The
site extended the Italian tradition theme of the offline branding with a recipe section,while a newsletter was used
as a data-capture mechanism to drive traffic to the site. Sophisticated sites
Since the days of that somewhat crude offering, consumer uptake of the internet has rocketed. This, in turn, has
prompted a growing number of FMCG brands to use the internet as part of their marketing strategy, and sites
have become increasingly sophisticated.
Unilever's global online activity has expanded to cover brands such Dove, Lipton, Surf, Calvin Klein and
Elizabeth Arden, as well as Persil, Lynx, Peperami and Birds Eye Fish Fingers in the UK.
The attractions of the web and online marketing are clear.Two major buffers have always existed between the
FMCG giants and their customers: the necessary evils of the mass media,to advertise their brands, and the
retailers, to sell them.The web gives the FMCG firm a huge opportunity to cut out the middlemen and sell
directly to the customer.
The scale of P&G's ambition is reflected in a statement it made last year. This said that its spend on internet
advertising and promotion in the second quarter of 1998 was a relatively tiny $3m (L1.88m) of a $3bn (L188m)
budget. But it also estimated that, by 2003, as much as 80% of that total budget could be going on the web.
"The internet is very much on the agenda at Unilever and P&G.They've realised it will affect consumers'
behaviour and are sitting up and paying attention," says Nick Jones, an analyst at Jupiter Communications.
The number of Unilever brands involved in online activity has more than doubled over the past year. "In 1998
we had around ten brands online - it's now something like 28," says St John Smith, associate brand director at
Unilever's Interactive Brand Communication Centre in New York, one of three centres set up to share best
practice between brand managers, category managers and agencies.
Unilever is increasingly moving toward more integrated activity, using the internet to back up and develop offline
marketing, and enabling brand managers to communicate with a much wider range of audiences. Last month,
Unilever launched a pan-European web site for Birds Eye Fish Fingers to boost the brand among nine- to 11-
yearolds, the age group where sales of fish fingers tend to drop off in favour of other convenience foods.
The site is based around the exploits of Captain Birds Eye and his crew, who are presented in cartoon-- style
narrative in a bid to make the characters more accessible to kids. A banner campaign on the kids' sections of
AOL and Disney.co.uk is also being used to drive traffic to the site.
Once there, visitors are encouraged to take part in a series of games and activities to complete an online
mission. Additional missions will be added on a regular basis, in a bid to develop ongoing relationships. Kids will
be encouraged to register their details to receive an e-mail informing them that the next stage of the mission has

01 October 2014 Page 1 of 5 ProQuest

gone live.
Alastair Duncan of APL Digital, which developed the site, says: "New media is about building relationships with
consumers. But, more than that, it's about enabling consumers to build relationships with the brand."
Unilever took a further step in this direction when creating activity for Dove in the US,positioning the site as an
online health and beauty resource which users could personalise according to their skin type.The site also
features more general advice, with tips on diet and meditation. To drive traffic to the site, Modem Media also
came up with a banner campaign which ran on Women.com. the US female-focused web site.
The FMCG companies know that some brands and sectors lend themselves more naturally to web development
and customer relationship building. The trick is finding out which ones, and then building on that connection.
"The site for Dove is about adding a personalised extra service to the brand that it didn't get in the shelf space.
It has also been very focused on data capture, which is obviously very important for developing relationships
with consumers," says Ebba Linden, account director on Unilever for Modem Media.
Unilever knows that the web has given it the chance to become a media owner in its own right, creating content
and sites which it doesn't Se have to pay huge sums for to third parties. Last year, Unilever spent around 234m
on advertising in the UK, of which L179m went on television. Like P&G, Unilever sees new media as a way of
reducing its reliance on costly mass media.
But are brand sites really the way to do this? Critics of brand sites argue that rather than building and
maintaining sites and getting people to visit them, brand owners should try to reach audiences by buying media
on existing hightraffic sites. Says Jupiter analyst Nick Jones: "There's a big debate going on as to whether
FMCG brands need a specific site, or whether they should concentrate on things like building the brand or calls
to action through banner advertising and sampling."
Unilever's most high-profile US online media tie-up came last year, when it unveiled deals with AOL and
Microsoft. The firms billed the move as "the kS largest-ever online marketing pact for a consumer packaged-
goods company".
The agreements, reported to be worth more than 20m over three years, incorporated activity across all
consumer brand categories, with brands including Surf, Dove, Lipton Tea, Ragu, Calvin Klein and Elizabeth
Arden. It covered advertising across relevant online channels such as cooking, childcare and health and fitness,
as well as joint plans to develop customised promotional areas across the AOL services in the US and
internationally.
In the UK, Marketing has learnt that Unilever is currently carrying out an audit of online activity across 35 of its
key brands.As well as reviewing strategy for existing online brands, it is also looking at doing online activity for
brands such as Organics, Timotei, Flora, Cup-a-- Soup and Domestos.
The review is understood to involve the company's interactive brand centre in Amsterdam, as well as its main
advertising agencies and their respective online arms - Ogilvy Interactive and APL Digital with brands divided
along existing agency lines.
There are also early indications that Unilever is seeking to shake up activity around its Persil brand with a
radical overhaul of the site, to make it more relevant to consumers.
The strategic review will also seek to determine which brands should have a web presence, and whether that
should take the form of dedicated sites or online media activity. The ultimate aim is to draw up clearer
methodologies and procedures for use of the internet, and integrate its online activity more closely with its
media schedule.
"The internet needs the involvement of all disciplines," says Nigel Sheldon, a partner at MindShare Digital."It
doesn't just focus on marketing and brand awareness there are huge things to juggle with."
While online media spend in the UK is still small,integrated activity is on the rise. Over the past 18 months
Unilever's Elida Faberge deodorant brand, Lynx, has regularly experimented with online media to back up
above-the-line campaigns and raise brand awareness.

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Avoiding mistakes
In February last year, the brand ran a five-week online banner campaign to back the launch of its Apollo
fragrance, and upped activity this year with a similar campaign for the launch of Lynx Voodoo.
Categories like personal care and beauty products are also considered to be more suited to the web because,
although they are FMCGs, they are also "high-consideration" products, which consumers are more inclined to
find out about.
P&G has also focused a lot of its activity around online work for brands in areas such as beauty and personal
care. The company has an umbrella site listing its brands with links to the main online properties, which include
sites for Pampers, Sunny Delight,Pantene,,Clearasil, Allways and Vidal Sassoon.
Perhaps even more than Unilever, the bulk of P&G's online activity has focused on the US, but it is stepping up
activity locally.
"We have about 50 online brands worldwide - that's come from a mix of strategic thinking and opportunism,"
says Frederic Colas, associate director ot interactive marketing for P&G Europe. "The internet is a totally
different medium to anything we've done so far.There are potentially big mistakes to be made by transferring
mass market advertising to the internet."
To try to avoid such mistakes, P&G helped to establish an alliance of potential online advertisers, publishers
and agencies dubbed FAST - the Future of Advertising Stakeholders. From this came FAST forward, a steering
committee charged with examining areas of concern in online advertising. It is a measure of how seriously P&G
is taking the medium that the company invited arch rival Unilever to sit on the committee, which also includes
representatives from IBM, Grey Interactive and Intel.
One of the challenges for FMCG marketers is that the internet is still largely a 'pull' media. Consumers have to
make a positive decision to visit a particular site, or take part in online activity.
P&G's internet strategy has developed accordingly. The company has a number of big brand sites, but is
increasingly moving toward developing themed sites,based on specific age or interest groups.The focus is on
user experience, tying the brand to consumers' interests or fulfilling a particular service or need.
Colas explains: "Unlike traditional media, the internet is controlled by the user, not the publisher. This affects
what we can do with the medium. It should be about what the consumer needs from us, rather than what we
need to tell them."
But what do you need to know about a soap powder, other than that it cleans clothes? Again, the important
issue has been working out which brands could benefit most from online activity. Brands must then establish
where the company can add value, and how it can deliver relevant information to a group or community.
The site for the sanpro brand Allways is an example of how P&G has attempted to develop one such brand
community site. As well as product information, it offers advice on women's health issues and information for
mothers with daughters on how to approach what can be an awkward subject. It also features forums for
teenagers and women,where they can address broader issues in their lives, and a section on inspirational
women around the world.
Pampers was another natural brand for development of this kind. In Germany and the US, a Pampers-- branded
site offers advice on baby health issues for parents. It features information on infant feeding and nutrition, while
an e-mail newsletter gives specific advice determined by the baby's age.
"Consumers are very concerned about the health of their baby, and we can add value beyond the marketing
message," says P&G's Colas.
In the UK, the company has been looking at developing a series of sites targeting particular age groups, rather
than being brand-specific. It is due to go live with the first such venture before the end of the year, with a site
aimed specifically at teenagers.
Positioned as an online community for young people, the site is likely to market brands such as Clearasil,
Pringles, Sunny Delight and Allways, featuring targeted content and agony aunt-style advice.

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P&G has also been in talks with portal site Excite UK about a tie-up to promote the site, with activity likely to
encompass sponsored content, and special events with banner executions to drive traffic.
P&G's move toward this idea of developing online communities indicates just one part of a more radical
approach. Earlier this year, in what is perhaps its most significant internet initiative so far, P&G unveiled plans
for a dedicated online beauty e-commerce venture, called reflect.com.
New partnerships
Reflect.com,which is due to launch in time for the US holiday season, will operate as a standalone business,
offering consumers an extensive range of online cosmetics and beauty products. The company is pouring
$SOm (31.3m) into the new business, in a deal with US venture capital business Institutional Venture Partners.
P&G recognises that make-up is a good place to start selling online. It is a high-consideration and relatively
high-cost product, which means people are more likely to buy it online, even in relatively small quantities.
The new service will also offer a greater degree of targeting than the company's existing forays into the
marketing of beauty products online, providing over 50,000 different product and packaging combinations.
P&G chief executive Durk Jager says the aim is to learn more about selling personalised products or services
online.
Until now, rather than selling directly themselves, the FMCG companies have looked to retain and reassure old
partnerships, while finding new ones for online ventures.
P&G runs a store-link program, providing links from its brand web sites to online and offline retail partners, while
Unilever last year tied up with online store NetGrocer.
"Unilever and P&G are working more and more with online retailers effectively buying online shelf space and
sales promotion," says Modem Media's Linden. But do the FMCG giants see the web as a way of bypassing the
retailer? And would such an ambition be realistic?
Unilever's tie-up with NetGrocer saw it promoting and selling a select number of brands on the internet retailer's
site,including Lipton,Ragu, Salon Selectives and Surf.
Perhaps more significantly, it also gave Unilever access to the web retailer's online database. Potentially, this
could enable it to identify which kinds of sites people who buy online are coming from. This, in turn, could help it
select the most effective media partner, if it decided to develop online sales at a later stage. And if Unilever
knows what kind of content drives people to buy online, why not develop that content itself?
P&G and Unilever may be interested in disintermediation - cutting out the middle man to sell directly to the
consumer - but this causes a potential minefield of problems with local-level retailers and distributors.
In the mass market, people are unlikely to buy low-value FMCG goods piecemeal on the internet why go
through the hassle of visiting 20 different sites to buy goods?
The other question is whether P&G and Unilever have a sufficient range of goods to allow them to offer a
complete one-stop shop online. The way people shop for FMCG goods in the real world is to buy them all in one
go. If they are to sell goods online, FMCG companies need to find ways to`bundle' goods together.
Community sites
Developing targeted community sites based around audiences might be a move toward doing this. And if they
control the content, they also have greater control and 'pull' over the consumer. Its teenage-focused portal could
allow P&G to group particular products together, and sell particular groups a selection of frequently used goods
in one go.
Babycare would be one area where FMCGs could go into bulk-selling online. Selling non-perishable goods -
such as nappies - makes sense, and also saves parents the hassle of carting around bulky items which could
potentially be bought far in advance.
The same goes for products like petfood. A number of vertical portal sites like The Pets' Pyjamas already sell
these kind of goods online,so why not the producers themselves?
Heinz last year launched a site called Heinz Direct.This sells a range of its most popular products in bulk online,

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but is targeted only at British expats who crave particular items, such as baked beans and ketchup, that they
couldn't buy abroad. The company stresses that it didn't want to replace existing channels - it was about fulfilling
a particular demand.
"The site was designed to stem requests from a small audience of people around the world who were desperate
to get hold of Heinz products. It was never meant to be a replacement for existing channels. We're very keen to
work with retailers," says Peter Ebsworth, marketing services manager at Heinz.
The Heinz Direct site was designed by Brand New Media, which also developed a site offering nutritional
information on all Heinz products. Heinz is also planning further online activity for specific product promotions
early in the new year.
At the moment, direct sale only makes sense for certain types of products or situations. It depends on how
much easier it is to buy online than offline, and the expense of shipping, from both the manufacturer's and
customer's point of view.
But what is certain is that the internet and online interactive media are changing both the communication and
business models that FMCG companies have worked to in the past. Everything is up for grabs in the digital age,
and P&G and Unilever, as in this century, are determined to lead the field.

Publication title: Marketing

Pages: 30

Number of pages: 3

Publication year: 1999

Publication date: Oct 21, 1999

Year: 1999

Publisher: Haymarket Business Publications Ltd.

Place of publication: London

Country of publication: United Kingdom

Publication subject: Business And Economics--Marketing And Purchasing

ISSN: 00253650

CODEN: MARKBC

Source type: Magazines

Language of publication: English

Document type: PERIODICAL

ProQuest document ID: 215001749

Document URL: http://search.proquest.com/docview/215001749?accountid=38885

Copyright: Copyright Haymarket Publishing LTD. Oct 21, 1999

Last updated: 2013-05-01

Database: ProQuest Research Library

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