Haleon plc (HLN) Earnings Call Transcript & Summary

So this campaign is called Believe My Pain, and it's really about trying to address a real gap that we've seen around health inclusivity and trying to really make sure that we help more people to benefit from better everyday health. This has touched more than 6.1 million lives with a 24% increase in brand affinity. We've also seen increases in brand trust and significant increases in purchase intent amongst black consumers as well as a 19% increase of awareness in general population. And that general population are actually claiming around 84% of them are feeling more empowered as a result of seeing this campaign. So I think we find that we deeply connect with consumers when we activate with purpose. Now there are other ways that we can connect with and engage with consumers. And one of the other ways is using humor. Now this story is about denture wearers. And denture wearers have their denture fitted, but they often ignore the signs that their mouths give them. And they have all sorts of coping strategies when they get discomfort. And discomfort is a real issue. Food can get under the denture. It can be really uncomfortable, but it really doesn't need to be. [Presentation]

That's one of the IR team's favorite adverts. We've had brilliant recognition for this campaign for the brand. And really, I think it just is testament to how by being really relevant to consumers, you can also be really memorable and drive sales.

And in terms of relevance, what are the big trends that you're seeing in terms of consumer behavior? And how is that impacting our marketing approach?

We've seen a big trend of consumers wanting to be more proactive around their health. And of course, then there's lots of demands for information and knowledge on how to do that. A particular trend we're seeing is continuing aging population, and people are now wanting to make sure that they're aging in a healthy way. It's a need and it's a real motivator and it's a great opportunity for a brand like Centrum. And what we're projecting is that as the population is aging, 1 in 6 people will be 60-plus by 2030. And so they are seeking vitamins, minerals and supplement solutions that support healthy aging, both including physical aging, but also mental aging. And we've participated in part of a study around clinical data that came out of a landmark study called COSMOS, which was carried out by organizations including Harvard University. And it shows clear evidence that taking Centrum multivitamins benefits brain and memory health in adults. Now we've turned this into communication, and we've seen really increased interest and demand in markets like the U.S. and in China. Another trend actually is this desire for experiences, whether it's in social media or gaming. And we're also seeing a shift in the willingness of consumers to engage with brands. So instead of the traditional blast something at them, a one-way communication, this willingness to have shared experiences with brands is getting stronger and stronger. And we saw an opportunity in China around e-gaming. Now when you're gaming, and I see this a lot, unfortunately, with my son, but you're sitting in quite an awkward way, which is creating all sorts of kind of pain and aches. So we created this idea of no pain in games. [Presentation]

It's amazing culture, behavior, trends continually evolving so we always have to find new ways to make sure that we are driving growth.

And coming on to growth, obviously, the big driver we've talked about externally is driving penetration. So how are we doing that across the brand portfolio?

Yes. Penetration is the strongest driver of growth for us. And even with our most mature brand Sensodyne, we still see significant headroom for growth. There's still a large number of folks who are suffering from sensitivity, but are not treating. And innovation is a brilliant way actually of addressing a new audience with new information, new benefit spaces. Sensodyne Clinical White, we have just launched in the U.S., and we're rolling it out across multiple markets. And this is a new subsegment for us, all around whitening with care. It's talking to a younger audience. These folks might not consider that they have an issue of sensitivity. And their media consumption is quite different. So they're on TikTok, they're on Meta. And really, what we're seeing is a demand for more short-form content for that to be authentic, to be real, to not feel like the advertiser is talking to them. So this is all about making content that genuinely feels more relatable. So we've increased our spend on Meta and on TikTok. So you've got targeted videos from dentists who are, again, delivering it in a much more authentic way in the way that they want to land messages on product benefits. But we're also using sponsored-influencer content. So this is where we get to drive awareness in a way that is really authentic and resonates with the target audience. [Presentation]

Really great to see serving that consumer health need in terms of insensitive teeth but also their request for whitening at the same time.

Yes. And there are other ways for us to drive penetration. So we can take our brands to new markets. And I'm really proud actually of how we launched Centrum in India as a digital-first brand. So we launched during Amazon's Great India Festival sale, which is a key digital shopping period. And by launching at the right time, we've really enabled the brand to quickly gain share, and we're now the #1 multivitamin on the platform. And obviously, A&P investment is really critical for us because that's what drives the awareness that then drives the penetration of our brands.

And one of the things we're often asked by investors and analysts is how do we know that our A&P spend is effective.

That is a great question. And it isn't just about the spend actually. The role of creative is really significant as well, so quality creative along with quality media. There's been studies over decades around creativity. But most recently, Kantar and WARC did put together a whole lot of data and really demonstrated that creative and effective ads can generate 4x as much profit as ones that are less effective and creative. And so we take this very seriously, and it does start back again with deep consumer understanding to understand what's relevant to them and then we really make sure that we validate with pretesting. So we do these tests, we see what's working, we get feedback on what's changed and then we change. So we work with MetrixLab. MetrixLab tests our creative against a huge database of all other brands. And that really helps us learn around what's working, what's not working. We also use AI or we use a tool called CreativeX. And what it does is it scans our creative to make sure that it's properly optimized for the various digital platforms. And sometimes it's just the most simple changes that can be incredibly effective. So we looked at the execution on one of our Poligrip pieces of communication for Japan and actually just made some very small changes. So we saw an increase in sales of 37% and a lovely bump to our ROI of 5%. But it isn't just about the creative. It is also about the spend. You can buy great media or you can buy very poor media. And what we're trying to do is make sure we're reaching our target audience in the places that they are. So we want to make sure we're buying really good quality placement. We're getting the right frequency, and we're also in the media channels that they're consuming. So we talked earlier about TikTok and Meta versus just maybe TV. And what we've seen is this increase in buying quality media is really driving better business outcomes. So a great example. We saw a step change in the U.K. with Sensodyne. And with better quality media, we actually saw our sales increase by 38% and our ROI increase by a really significant 21%. Another brilliant example, I think, is on Voltaren. Again, we increased the quality of our TV buy and saw a significant increase, so 63% improvement in sales effectiveness and a 6% increase in our ROI. But we are never satisfied. We're always continually learning and making sure that we're driving for the right improvements.

And these are some great sales outcomes. So how else do the marketing team know that they're on track?

Actually, marketing and the art of measurement is becoming really critical. It's probably very detailed, lots of data-driven opportunities. So we make sure that we benchmark against competition. We're checking that we have sufficiency to make sure that we are properly supporting each of our campaigns or innovations. And we get quite good quick feedback so that we can course-correct. So if we find that one channel is performing better than another, we can switch our media spend to that channel. So we're quite dynamic. We have an approach called market mix modeling. That covers nearly 70% of our spend, which is a significant amount. And from that, we get all of these learnings. We also don't just track the short term. We're tracking the long-term brand health. So there's a measure called the demand power. And if you have a strong brand, you have strong demand power. And what that means is you are much more likely in the future to be able to grow both your volume, but also you have pricing power, so you can grow through value as well. So we have this continuous feedback loop of both short- and longer-term measures. And I think we're doing a good job. We're understanding where our spend is and how best to deploy it, but it is a continuous improvement journey always, particularly when you think about how much the ever-changing landscape is out there and how media is changing and evolving. So we always have to kind of keep on our toes.

Thanks very much, Tamara.

Thank you.