GSK and Next react to online adspend

GSK (GlaxoSmithkline) has opted to allocate more of its budget to online media adspend, because the returns are far greater than those achieved through TV advertising. This comes after the pharmaceuticals giant started a partnership with Google that led to a 74 per cent increase in impressions coming from the same amount of investment, reports Campaign.

A report from the company said: “By putting digital technology at the heart of our business, we aim to deliver more meaningful interactions with consumers, fuel brand growth and achieve efficiency savings.” It added that increasing the digital balance of its marketing was a reflection of the higher return represented by online media in comparison to more traditional TV advertising.

GSK, which makes products such as Corsodyl, Voltarol and Panadol, has also started to work with Alimama, which carries out the marketing for Chinese giant Alibaba. Further highlighting its dedication to digital, GSK has enrolled 1,300 of its staff on a Marketing IQ course and established a digital advisory board with individuals enlisted from outside the company. While the brand has not taken to digital media as quickly as some of its rivals, it is now making up for the slow uptake.

Nielsen estimates that £20.1m of its £58.2m adspend in 2018 went on digital, which equates to 34 per cent of the total. That is in comparison to £3.7m or just eight per cent in 2017 and £1.8m (four per cent) in 2016, although there is some debate as to whether all of the earlier estimates captured the entirety of the digital activity. GSK still spent more than half its advertising budget on TV in 2018, ploughing £32.3m into the medium. It will be interesting to see what the figures look like for 2019.

Meanwhile, British clothing company Next has also put more of an emphasis on digital advertising compared to more traditional alternatives. It has doubled the amount it spends on digital marketing over the last year after it discovered much higher returns than had been predicted. The brand allocated £36m to its digital campaigns in the year up to January 2019, which is a large step up from the £19m it spent in the previous year.

In the company’s annual report it said: "The returns achieved on digital marketing have been higher than expected and particularly strong overseas, where we have struggled to make a return in the past."

Next confirmed that slashing the budget for “more traditional marketing” was the result of the changing nature of its business. While its high-street sales have been going down eight per cent year-on-year, online revenues have seen an increase of 15 per cent, representing about half its turnover. Looking towards the future, Next said that things are on course for its digital marketing budget to have increased by a whopping 500 per cent from January 2016 to January 2020.This will be a move from £8m to £46m, showing just how dramatically the advertising world is changing and what a difference five years makes.

Lord Wolfson, chief executive at Next, admitted that it’s taken time for the brand, which was originally a catalogue business, to bring its marketing and website operations in line with the times. He said: “Three years ago, we described the extent to which our online marketing and website systems had fallen behind the best in our sector. “Since that time, we have responded vigorously and made significant progress in bringing our website, marketing capabilities and other online systems up to date with new technology.”

What both GSK and Next have discovered is that even if a company isn’t the first in its industry to adapt to new technologies, it cannot afford to let such developments pass them by. Digital advertising is a powerful force that is growing and businesses ignore it at their peril.