MDC Partners
Cash-Rich Companies Are Showing Marketers The Money
By STEVE SCHAEFER
After a recession marked by drastic cost-cutting, the balance sheets of America’s largest companies are flush with cash, and much has been made about how these household names should be putting their largess to work.
Returning money to shareholders through buybacks and dividends or adding value through acquisition are two oft-mentioned strategies, but for major corporations that anticipate slow economic growth, spending on marketing in challenging times can have an outsized impact on market share.
That’s the view from Miles Nadal, Chairman and CEO of Toronto-based marketing communications firm MDC Partners, who says ad spending among his firm’s clients is coming back and he only expects it to get stronger in the back half of 2010.
Why?
Well for one thing, companies are seeing results. Domino’s Pizza, an MDC client, reported a 57% increase in second-quarter profits after launching a campaign that included a reformulation of the company’s pizza recipe and a focus on social media exposure.
That social media element is crucial, Nadal says, and its an area where MDC is aggressively looking to expand.
Given that the biggest multinational advertisers – “everyone from Coca-Cola to Microsoft to Diageo,” Nadal says – are moving more and more ad work to small niche shops the market is becoming more fragmented, particularly as advertising becomes less reliant on traditional media like newspapers and television.
Consider the wildly successful “Smell Like A Man” campaign for Procter & Gamble’s Old Spice, which includes a Twitter account with 101,000 followers and a YouTube channel that has been viewed more than 10 million times.
Much has been made about the ability to monetize social media outlets like Twitter, YouTube and Facebook, but in a world in which brand building has “from persuasion by advertisers to influence of trusted sources,” Nadal says such integrated campaigns are only going to become more commonplace.
Nadal isn’t just counseling his clients to take advantage of the weak economic environment to get deals done and increase market share either, he’s also taking his own advice. Days after we spoke MDC announced the acquisition of a majority stake in New York-based experiential marketing firm Relevent.
“In 2009, we went into a 10-year bullish view on America,” Nadal says, comparing MDC’s decision to “go long” with aggressive acquisitions to Warren Buffett’s late 2008 “Buy American” rallying cry and subsequent acquisition of Burlington Northern.