Sadly (if you’re one of their shareholders), that was not the case for the Coca-Cola Company and Procter & Gamble. These two pillars of the S&P 500 were punished for less-than-stellar results.
The interesting thing was that both announced significant marketing news in response to their poor Wall Street showing.
Of the two companies, one had clearly seen the headwinds coming and had grabbed marketing headlines for the last few weeks to perhaps build a cushion to soften the blow and to show the Street that when the going gets tough, the C-suite gets going. The other company was The Coca-Cola Company.
P&G has been grabbing headlines since the beginning of this year. Marc Pritchard, Procter & Gamble’s chief brand officer and chairman of the Association of National Advertisers (ANA), first confessed that P&G had lost its way in recent years, chasing shiny new objects and thereby fragmenting many of its top brands’ key audiences, underdelivering the reach-tonnage they need to shift the millions of SKUs they have.
After that confession, Pritchard went on to challenge the digital ad industry in his role as ANA chair. He said it was time to “cut the crap” (his words) and return to a world where media delivery is measurable, the way it is bought is transparent and the agencies managing it are on the advertisers’ side. All this seemed a clear strategy to right the ship that had gone adrift.
Last week, P&G CFO Jon Moeller reiterated P&G’s new marketing direction as laid out over the last few weeks by Pritchard. As Moeller is the CFO, he added the numbers that go with the strategy: Marketing budgets are to be reduced by $2 billion by “eliminating media supply waste, reduced agency fees and cutting advertising costs.” He specifically addressed the middlemen, saying “There are too many holes, too many people are able to take advantage, it’s murky,” thus proving a perfectly aligned C-Suite.
And what did The Coco-Cola Company do? Well, it had already let CMO Marcos de Quinto go after only two years and three months on the job. So it announced a significant round of head count reduction (of 1,200), which would include further marketing department reductions (a lot of departures had already happened when de Quinto took on the CMO role).
What is perhaps most surprising is that, after 130 years (the company celebrates its birthday May 8) Coca-Cola will not have a dedicated marketing leader. That responsibility is now incorporated into the chief growth officer function, which straddles marketing, customer and commercial management.
I cannot stress enough what a big departure this is for Coca-Cola. Sure, Joe Tripodi at one point had the title chief marketing & commercial officer at Coke, but it was still marketing first. Now marketing at Coke is not only not a function, but nobody in the C-Suite even has the word marketing in their title.
Time will tell if P&G’s approach is smarter than Coke’s. This time around, my money is on Cincinnati.