What you need to know:

• IAB Europe analysed financial reports of the top 1,000 global companies, uncovering trends in branding, digital integration, and reliance on AI.
• The brands whose reports it assessed included Unilever, P&G, Pepsico, Nestle. L'Oreal and Colgate Palmolive.
• The convergence of branding and digital marketing is reshaping advertising logic, with a growing focus on business outcomes over traditional marketing metrics.
• Marketers are investing heavily, even as revenue growth lags behind, signalling a shift in the relationship between marketing and business accountability.
• The integration of marketing into cloud environments is changing how brands allocate budgets, emphasising efficiency and digitisation across all processes.

Digital and brand strategies are converging, and top global companies are reimagining marketing using data-driven insights and artificial intelligence, revealing a fundamental shift that demands CMOs rethink their approach to drive efficiency and business outcomes, according to a recent analysis by IAB Europe.

The IAB Europe trained a large language model to work its way through the financial reports of the top 1,000 companies worldwide, revealing a set of consistent trends including the convergence of brand and digital, continuing resilience in data analytics despite (or maybe because of) signal loss, and of course a growing reliance on AI.

“We trawled through their earnings calls to see what narratives are actually surfacing," says Daniel Knapp, chief economist IAB Europe speaking at yesterday's IAB Australia's Leadership Summit in Sydney.

Among the findings:

• Unilever is focusing on its digitally native brands for targeted investment towards innovation and brand building to drive market growth and maintain product superiority.
• P&G has a strong push for digital capabilities in consumer targeting.
• Pepsico increased marketing expenses by 10 per cent with a focus on digital campaigns and brand enhancement.
• Nestlé is leaning into data analytics, focussing on sell-out data from Nielsen IRI, and ecommerce channels.
• L'Oreal is looking to leverage AI for better marketing investment returns and to support brand growth.
• Colgate Palmolive aims to enhance brand health and household penetration, with a strong emphasis on advertising investments globally and leveraging data and ROI to optimise ROI.

While Knapp focussed on CPG companies in his presentation, he said the same themes and patterns are repeated across categories, “and this forms the foundation for a new advertising logic,” he suggested.

“The first thing to note is that branding and digital, which used to be like fire and water a couple of years ago, are now coming together. And the second thing is, despite the signal loss, etc, the importance of data and targeting is increasing, particularly in combination with business outcomes, not marketing outcomes, but business outcomes.”

Business leaders are using AI as an efficiency driver, and as an interpreter, to connect everything together, he said.

Per Knapp: “As a consequence, marketers are spending a lot of money even if some media owners are not seeing the proceeds. If you are not seeing it that doesn't mean it doesn’t exist. It means you are in the wrong market or selling the wrong thing.”

He said the growth in marketing spending among large marketers is outstripping growth in revenue. “This is something we will continue to do in the next couple of years. This is a hugely important pool of opportunity that sellers of media can capitalise upon – are they really doing that right?”

Knapp argues that the emerging cohort of marketing leaders is not anchored to the symbiotic relationship that existed in the past between mass media and mass brands.

They think about marketing quite differently and they have to because suddenly they are accountable to others.

Ahead in the cloud

“Marketing used to be a silo but more and more we are seeing that digital marketing is integrated in these transformation activities which manifest in the cloud.”

Marketing is increasingly moving into corporate cloud environments which for the digital ecosystem supports that marketing creates what he calls “an API into the brain cells of advertisers.”

“Marketing and cloud are coming together, which means that marketing has more say over the business, and also that business goals are funnelled into marketing.”

According to Knapp, “This is going to drive digital investment in the future.”

Lower growth, higher costs

The way brands advertise and the logic of where they allocate budget is changing, he said.

The last period of really strong growth in consumer industries, which invest a lot in advertising, as much as  20 per cent of the total revenue was just before the pandemic, he said.

In contrast, brands are now suffering near and midterm lower growth and higher costs.

“That means companies need to become more efficient. They're investing to become much more efficient and lock into digitisation overall. That’s not just  marketing digitisation, but their overall processes.”

That doesn’t mean they care less about marketing, but rather it has changed where they attach marketing.

“It is no longer in a silo of its own metrics, detached from the business, but actually they want to link marketing and sales – actually let the CMO world speak to the CFO world.”

“And this connection of marketing and business outcomes is something that is fundamentally changing investments.”