Oreo maker Mondelez's CEO says he's going to hold ad agencies more accountable - here's how
- Bucking the in-housing trend, Oreo maker Mondelez International is more open than ever to working with agencies, its CEO Dirk Van de Put told Business Insider.
- Still, Van de Put said he's demanding more accountability from agencies, pushing to pay them based on ROI.
- With digital advertising under scrutiny, he also said there's a lot of waste on online channels and that Mondelez needs to better understand the impact of its digital advertising.
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While some other marketers are doing more of their advertising themselves, Oreo maker Mondelez International sees a strong case for ad agencies.
Still, the snack giant is demanding more accountability from its agencies, pushing payment that's based on ROI, Dirk Van de Put, CEO of Mondelez International, told Business Insider.
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Marketers like Verizon, JPMorgan Chase, and Chobani are driving the in-housing trend, which is motivated by a desire for more control, transparency, and cost-saving. The Association of National Advertisers found that 78% of brands surveyed had some form of in-house agency.
But Van de Put said Mondelez values the experience that agencies bring from working with all different kinds of companies.
"What we want from them is skin in the game," he said. "We want them to be as accountable for the results as we are. We ask for fees that are variable depending on the results that we obtain. If you tell me, 'No Dirk, your fee will depend on how successful we are,' that changes the game for me. So we try to push that."
Mondelez is questioning digital advertising's value
In a wide-ranging conversation, Van de Put also discussed the pros and cons of advertising in the digital age and said there's a lot of waste on online channels.
The platform giants Facebook and Google have been under fire from regulators and advertisers over scandals about their use of consumer data and misuse by outside actors to spread fake and harmful information.
While another marketing giant, Procter & Gamble, has been shifting money from digital to TV and radio, Mondelez is also questioning digital media's value, Van de Put said.
"There's a little bit more discussion about the fact that digital and digital only would be a good thing for us," he said. "I think the discussion was led by Proctor. And we're of the same position that we really need to understand much better what's going on. We've spent 40% of our budget on digital. We like the ROIs. We like the way the business is growing. It doesn't mean that we feel that we need to make a big change. It's just more, let's be careful."
On how Facebook and Google, the dominant sellers of digital advertising, can serve Mondelez better, Van de Put said he wanted to know more from them about how online behavior leads to online shopping.
The snack giant wants more information from Google and Facebook about how its ads work
"We would like, without knowing who the consumer is, to be able to identify the consumer as they switch from one social media to another through an online retailer," he said. "At the moment, that is not available, and for us that leads to a lot of waste."
Broadly, Van de Put said digital media has given marketers the ability to pinpoint ads to consumers, but brought other challenges, such as the ability for ideas to go viral, outside of brands' control; and the complexity that comes with having many marketing messages out there at once.
"At the moment, we have more than 100 different Oreo messages out there, which are targeted to different consumers," he said. "Is that good or is that a bad thing? Are we getting the right message out there for the different consumers, and are they picking it up right?"
Digital advertising can produce high ROI by pinpointing people who are known to like Oreo's, for example. TV or outdoor exposes a lot more people, though. The challenge is to balance the need to show a good return on ad spending with reaching a broad enough audience, he said.
"How do we get a decent ROI while we still aren't going as broad as we want to go with our message?" he asked.