Church & Dwight Co., Inc. (NYSE:CHD) Q4 2023 Earnings Call Transcript

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It’s important to say here that we have seen a sustained post-COVID momentum in almost all of our categories where the consumer wants who has decided and chosen convenience doesn’t want to give it back. Think about getting your letter subscribed and showing that up every month on your door versus having to lug it from the store. Of course, we are incessant about all-time share highs like Barry was speaking. In the online world also, we have new metrics where we say we aspire to be, in online share, at least equal or higher versus brick-and-mortar. And we have had some fantastic success, as you see here, six out of our new seven power brands have grown in the share in 2023. And these are some all-time high share. Names, ARM & HAMMER, both laundry and litter, THERABREATH, NAIR and SPINBRUSH.

It’s important to understand. Now these were the results, like the what. Now I will speak a little bit to the how. As Rick was mentioning, a lot of our media spend in the last couple of years has pivoted to digital, right? Simply as the consumer has gotten on to more digital consumption, which is 80% today. But more beautiful than that is, as we have more tactics to measure the efficacy of our media, we are having more and more ROI on every dollar that we put so we get maximum stretch out of our dollar so that we don’t just meet the consumer at that moment of truth to get better returns on that dollar spent. So broadly, right, I’m going to speak about the consumer connection in that zero moment of truth, whether the consumer meets us in an out-of-home advertising, on a YouTube video, or an Instagram influencer.

But we add to it the incessant and the hallmark of Church & Dwight that is beautiful executional excellence. So I’ll share with you some examples of how we execute. These are some digital plus out-of-home advertising. What you will note here is each of them you might have seen in your own feeds. Sorry, back. Each of these you might have seen in your own feeds. What we try to do is we want to make content that is authentic to the platform. So when you see a YouTube advertisement or a Pinterest or a TikTok advertisement, it doesn’t feel like an ad creative. It feels like a creative that was meant for that platform. And that’s why it generates more thumb-stopping connection with the consumer. Interestingly, I’m sure AI is a buzzword all over the place.

One thing that we are noting is, there are some use cases of AI, especially in MarTech, where the creative that you see on the left from our brand NAIR usually, we might have story-boarded and created that over five, six days. With the help of technology and with the right human oversight, these kind of creatives can now be created in under five hours or so. And we try to scale those creatives in what you see on the right, in a very large surround sound mode. So like I was mentioning, we have fit-for-platform, TV creative, social creative, retail media creative as the consumer buys online and search, all of that comes in a surround sound cohesive manner so that your MarTech-enabled creative goes far this right to the point of purchase. Social.

Social is what I call as the consumers engage in doomscroll, the endless scrolling. These are some creatives, which are truly, I believe, authentic, thumb-stopping, they are snacky content. We are no longer in the era where we would make a 60-second TV commercial, cut it down to six seconds. We want to. And we do make commercials that are fit from platform six seconds. And like we say, on TikTok, we don’t make ads, we make TikToks. So that’s the kind of creative we have. All of this creative is amazing. But as we get the consumer from inspiration to purchase, we have to make sure we have one click-to-cut, because we know every time the consumer has to click more times, we lose 90% of that traffic. So from inspiration to purchase, it has to be a single click, and that’s what drives a lot of our online revenue.

Another interesting pivot we have seen, especially in the last two years, usually, we would do go-to-market and go brick-and-mortar first and go large. We have slightly changed that model, especially for some launches like ARM & HAMMER Power Sheets and Hardball, where we would launch online first, get initial category and consumer insight, all that rich data, all the ratings and reviews Barry was mentioning, do audience testing on the different social platforms. A, we test the product detail page, the content that you see. And once we are satisfied by making it good online, we make it big in brick-and-mortar. That’s exactly what we did with Hardball. That’s what we are doing with ARM & HAMMER Sheets. We noticed that on sheets, the consumer is looking for not just a sustainability message of good for you and good for the planet.

They are looking for the clean that they trust in ARM & HAMMER. And that’s what we learned online. And then we take it to brick-and-mortar in a large way. So in summary, in terms of metrics and aspirations, like I said, we are not in the business of getting consumers to shop online, but we are where the consumer is. And online is a lot of growth for us, so we will be very passionate about growing online sales and share growth. To clarify on share, we don’t just look at pure-play that is Amazon and Chewy. Online share is measured across Amazon, Chewy, walmart.com, target.com, kroger.com because that’s the universe of where eCommerce happens in the country and globally. We are also more, Tech powered and human-guided, related to the MarTech and AdTech investments that we are making.

And the next step, the 2.0 and online for us is we are going to be more focused on efficiency and profitability ongoing to make fit-for-channel kind of products that make sense for us in the online world. So I just want to say, in ending, we have come a long way from digital being a capability builder for Church & Dwight, to digital now being a true business and growth driver for the company. So with — on the topic of growth driver, I’ll give it to Mike Read, because International is also a huge growth driver for us. Thank you.

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