http://online.wsj.com/article/SB123983651029422787.html?mod=dist_smartbrief
Drug makers cut their spending on consumer advertising of prescription drugs by 8% in 2008 to $4.4 billion, the first pullback since at least the late 1990s in their efforts to get patients to request a particular medicine.
Such ads have surged since 1997, when the Food and Drug Administration relaxed restrictions on drug advertising to consumers. U.S. spending on such drug ads hit a peak of $4.8 billion in 2007, according to market researcher IMS Health, up from less than $1 billion in 1997.
Pharmaceutical-ad experts blame last year's spendng decline on fewer new-drug introductions and heightened congressional scrutiny of drug marketing.
Critics say the ads, which are permitted in few other countries, inflate health-care costs by prompting patients to request brand-name medicines, rather than cheaper generic alternatives. The industry's trade group, however, cites a 2003 statement from the Federal Trade Commission that argues that the ads educate consumers about drug options and haven't been shown to lead to higher prices.
In the U.S., ads aimed at consumers typically account for only about 40% of the total marketing budget for prescription drugs, according to the pharmaceutical industry. The majority of manufacturers' promotional efforts are directed at doctors.
The slowdown on the consumer-ad front has already hurt some advertising agencies, including Publicis Groupe SA and Omnicom Group Inc. "Health care continued to slow in the quarter due to a lower number of new-product releases and cuts in spending from the large pharma companies," said Randall Weisenburger, Omnicom's chief financial officer, during a conference call with analysts in February.
Merck & Co. and Schering-Plough Corp., which jointly market the top-selling cholesterol drug Vytorin, sharply cut spending on consumer ads last year to $47 million from $114 million, IMS said. The decline came after two Michigan congressmen, Reps. John Dingell and Bart Stupak, criticized the companies for advertising the drug while allegedly delaying the release of a medical study that found Vytorin was no more effective in some patients than a cheaper alternative.
Friday, April 17, 2009
Dr Pepper Snapple, bucking trend, ups advertising
http://www.reuters.com/article/ousiv/idUSTRE53F6CM20090416
NEW YORK (Reuters) - Dr Pepper Snapple Group Inc (DPS.N) is risking a different approach to the recession than other major advertisers: the soft drink maker is boosting its marketing budget, saying that's what worked best in the last big downturn.
Spending this year on everything from TV spots to print advertisements and more experimental Web campaigns will rise by up to 5 percent, the company's head of marketing, Jim Trebilcock, said in an interview. The company says its total marketing budget is about $300 million to $400 million.
The decision to spend more makes Dr Pepper Snapple an exception in a year when forecasters see overall U.S. advertising spending dropping by 8 to 10 percent, the steepest decline in more than two decades.
Company executives said they decided on the strategy after research firm Nielsen produced a study for them that detailed ad spending patterns during the early 1980s, the last prolonged advertising downturn.
"We wanted to find out what were the brands that were successful in '83 and '84, coming out of the recession?" said Trebilcock. "What did they do differently than others during the middle of the recession? Uniformly, the thing that came back is they didn't retrench. They reinvested."
The upshot is "dollars this year from a marketing standpoint are actually increasing," he said. "We believe that if we invest now, then when we come out of this thing in a year or two we'll be in a much stronger position."
This year, Dr Pepper Snapple will divide its creative advertising duties chiefly among three agencies. Interpublic Group's (IPG.N) Deutsch L.A. will handle Dr Pepper, Diet Dr Pepper and Snapple; WPP Group's (WPP.L) Y&R San Francisco is responsible for 7UP, Sunkist and A&W; and Laird & Partners will work on the Mott's brand.
As part of the marketing push, Dr Pepper Snapple is running new advertising for A&W, Canada Dry and Mott's -- brands that were long excluded from fresh ad campaigns.
In addition, Dr Pepper Snapple, the third-largest soft-drink maker in the United States behind Coca-Cola Co (KO.N) and PepsiCo Inc (PEP.N), is investing more in the ongoing make-over of its Snapple brand.
Following its spinoff from Cadbury Plc (CBRY.L) nearly a year ago, Dr Pepper Snapple has set its sights on reversing slumping sales of Snapple.
Now, in trumpeting the drink's health benefits, the Snapple tea label stresses that it's "all natural" and is brewed from green and black tea leaves. It has begun producing the tea with sugar rather than high fructose corn syrup.
The company also tweaked the formula of A&W, and is marketing the soft drink with a campaign that emphasizes it is made with "real aged vanilla," said Trebilcock. "We wanted to communicate it almost like a craft beer," he said.
For all its brands, Trebilcock said, the company wants to remind consumers that the drinks are relatively inexpensive even when household budgets are tight, but plans to avoid "overtly hitting people over the head" with money-saving messages.
"What we believe is that consumers will recognize the relative value," he said. "It's about reminding consumers why they love the fun flavors and great taste of our products. In an environment where coffee is five bucks a shot, here's Dr. Pepper at 33 cents a can or Snapple at $1.50."
As for the marketing mix, Trebilcock said it varies by brand but generally about 70 percent of ad spending occurs on TV, radio, and billboards, with another 20 percent spent online and the remaining 10 percent used for a variety of other promotions.
NEW YORK (Reuters) - Dr Pepper Snapple Group Inc (DPS.N) is risking a different approach to the recession than other major advertisers: the soft drink maker is boosting its marketing budget, saying that's what worked best in the last big downturn.
Spending this year on everything from TV spots to print advertisements and more experimental Web campaigns will rise by up to 5 percent, the company's head of marketing, Jim Trebilcock, said in an interview. The company says its total marketing budget is about $300 million to $400 million.
The decision to spend more makes Dr Pepper Snapple an exception in a year when forecasters see overall U.S. advertising spending dropping by 8 to 10 percent, the steepest decline in more than two decades.
Company executives said they decided on the strategy after research firm Nielsen produced a study for them that detailed ad spending patterns during the early 1980s, the last prolonged advertising downturn.
"We wanted to find out what were the brands that were successful in '83 and '84, coming out of the recession?" said Trebilcock. "What did they do differently than others during the middle of the recession? Uniformly, the thing that came back is they didn't retrench. They reinvested."
The upshot is "dollars this year from a marketing standpoint are actually increasing," he said. "We believe that if we invest now, then when we come out of this thing in a year or two we'll be in a much stronger position."
This year, Dr Pepper Snapple will divide its creative advertising duties chiefly among three agencies. Interpublic Group's (IPG.N) Deutsch L.A. will handle Dr Pepper, Diet Dr Pepper and Snapple; WPP Group's (WPP.L) Y&R San Francisco is responsible for 7UP, Sunkist and A&W; and Laird & Partners will work on the Mott's brand.
As part of the marketing push, Dr Pepper Snapple is running new advertising for A&W, Canada Dry and Mott's -- brands that were long excluded from fresh ad campaigns.
In addition, Dr Pepper Snapple, the third-largest soft-drink maker in the United States behind Coca-Cola Co (KO.N) and PepsiCo Inc (PEP.N), is investing more in the ongoing make-over of its Snapple brand.
Following its spinoff from Cadbury Plc (CBRY.L) nearly a year ago, Dr Pepper Snapple has set its sights on reversing slumping sales of Snapple.
Now, in trumpeting the drink's health benefits, the Snapple tea label stresses that it's "all natural" and is brewed from green and black tea leaves. It has begun producing the tea with sugar rather than high fructose corn syrup.
The company also tweaked the formula of A&W, and is marketing the soft drink with a campaign that emphasizes it is made with "real aged vanilla," said Trebilcock. "We wanted to communicate it almost like a craft beer," he said.
For all its brands, Trebilcock said, the company wants to remind consumers that the drinks are relatively inexpensive even when household budgets are tight, but plans to avoid "overtly hitting people over the head" with money-saving messages.
"What we believe is that consumers will recognize the relative value," he said. "It's about reminding consumers why they love the fun flavors and great taste of our products. In an environment where coffee is five bucks a shot, here's Dr. Pepper at 33 cents a can or Snapple at $1.50."
As for the marketing mix, Trebilcock said it varies by brand but generally about 70 percent of ad spending occurs on TV, radio, and billboards, with another 20 percent spent online and the remaining 10 percent used for a variety of other promotions.
Wednesday, April 8, 2009
Ford Takes Online Gamble With New Fiesta
Auto Maker to Loan 100 Young People a Car; They'll Post Videos Over Which Ford Has No Control To build a new generation of Ford car buyers, the "Fiesta Movement" marketing effort is enticing its 100 test drivers with a free car for six months, auto insurance and gas. In return, they agree to upload their adventures online.
Ford selected the 100 participants from more than 4,000 video submissions viewed more than 640,000 times online. Ford assigned applicants two scores: a "social vibrancy" rating based on how much they were followed online and across how many platforms; and an overall grade based on those factors plus creativity, video skills and their ability to hook a viewer within the first five to 10 seconds.
http://online.wsj.com/article/SB123915162156099499.html
Ford selected the 100 participants from more than 4,000 video submissions viewed more than 640,000 times online. Ford assigned applicants two scores: a "social vibrancy" rating based on how much they were followed online and across how many platforms; and an overall grade based on those factors plus creativity, video skills and their ability to hook a viewer within the first five to 10 seconds.
http://online.wsj.com/article/SB123915162156099499.html
Thursday, April 2, 2009
Media and Entertainment M&A News Flash For 2009: It Will Get Worse
http://www.pwc.com/extweb/pwcpublications.nsf/docid/6B9511900FF64CFF8525755A005B9328
You think? Media and entertainment M&A in 2009 will be “significantly less” than last year, according to a new report from PricewaterhouseCoopers. While the value of disclosed deals in 2008 was $150.8 billion, the highest seen since 2001, that was mainly due to a backlog of four “megadeals” announced in 2006, the report said. Excluding this backlog impact, total disclosed deal value falls to $74.6 billion, a significant decline from prior periods. In terms of overall transaction volume, a total of 1,000 deals were completed in 2008, a decrease of 17 percent from 1,202 in 2007, clearly the result of challenging market conditions. Excluding this backlog, total disclosed deal value fell to $74.6 billion in 2008, a significant decline from prior periods. on volume, a total of 1,000 deals were completed in 2008, a decrease of 17 percent from 1,202 in 2007, a result of the deepening recession.
But some hope for media dealmakers amidst all the doom and gloom: “With M&A ingrained in the DNA of so many companies and the ever growing presence of private equity, we would not be surprised to find the E&M sector more active than many expect in 2009. While the overall value of closed deals in 2009 will likely remain well below the high water marks of 2007 and 2008, overall transaction volume may prove a bit more resilient. History has also shown the E&M industry to be one of the more active M&A sectors irrespective of market conditions.”
You think? Media and entertainment M&A in 2009 will be “significantly less” than last year, according to a new report from PricewaterhouseCoopers. While the value of disclosed deals in 2008 was $150.8 billion, the highest seen since 2001, that was mainly due to a backlog of four “megadeals” announced in 2006, the report said. Excluding this backlog impact, total disclosed deal value falls to $74.6 billion, a significant decline from prior periods. In terms of overall transaction volume, a total of 1,000 deals were completed in 2008, a decrease of 17 percent from 1,202 in 2007, clearly the result of challenging market conditions. Excluding this backlog, total disclosed deal value fell to $74.6 billion in 2008, a significant decline from prior periods. on volume, a total of 1,000 deals were completed in 2008, a decrease of 17 percent from 1,202 in 2007, a result of the deepening recession.
But some hope for media dealmakers amidst all the doom and gloom: “With M&A ingrained in the DNA of so many companies and the ever growing presence of private equity, we would not be surprised to find the E&M sector more active than many expect in 2009. While the overall value of closed deals in 2009 will likely remain well below the high water marks of 2007 and 2008, overall transaction volume may prove a bit more resilient. History has also shown the E&M industry to be one of the more active M&A sectors irrespective of market conditions.”
WPP's Spence: 'We Got The Memo: Keep On Acquiring'
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/05/AR2009020501350.html
While the sputtering economy has slowed M&A activity considerably the last few months, WPP Group apparently didn't get the memo that now's the time to retrench and wait. Actually, Sheila Spence, SVP in WPP's corporate development, told attendees at the DeSilva + Phillps Dealmakers Summitt that she's gotten a very different memo. Speaking on a panel with other ad agency execs, Spence said: "We did get a memo: keep on acquiring. If you look at the deals we've done, they fall bull's-eye into the company's strategic goals, including having one-third of our revenue from BRIC companies and building up our digital assets." In the past week alone, WPP has taken a 49 percent stake in South Africa's The Jupiter Drawing Room and invested $25 million in Seattle web analytics firm Omniture.
?Buyer/Seller expectations: The hope that acquisition targets might lower their prices as the economy has cooled hasn't really materialized, Spence said. "There's still a mismatch between what's happening in the market and the behavior of clients. When we look at acquisition targets, smaller companies haven't fully absorbed the impact of the economic changes. Deal structure can overcome a lot of the issues, in terms of how the payments will unfold." Tom Harrison, chairman and CEO of Omnicom Group's DAS, added: "We see a new reality and there is a bit of a moderation at the seller level. The divide between us and the prospective companies we seek to acquire will shrink. But having sold my company to Omnicom years ago, I think we all think are companies are worth more than they are."
?Integration vs. specialization: Asked about the structure of earn-outs when it comes to digital acquisitions, Luke Taylor, CEO of LBi International, said it remains tricky: "We're more nervous about it. Half of an acquisition is about acquiring a business's customers. We try to create a single P&L, rather than a set of independent companies. Especially in the digital space, clients want accountability. They don't want a separate search specialist. But it's not particularly easy to structure deals that way."
Reckitt-Benckiser to Shift $20 Million to Web From TV
http://adage.com/mediaworks/article?article_id=135660
The company plans to shift an estimated $20 million in TV ad dollars to the web for more than 15 of its brands, including Lysol, Air Wick, Mucinex, Finish and Clearasil. The strategic shift is significant for the company, which has traditionally spent upward of 90% of its $475 million measured-media budget on TV, and less than $1 million in measured spending on the web in 2008, according to TNS Media Intelligence. Even though its 2008 internet advertising through the first half was already double its full-year internet spending in 2007, it was still only 1% of media spending.
Reckitt-Benckiser's Mr. Fonzetti said the campaign will be measured using a method that combines TV's gross rating points with the web, with additional interactive layers such as online coupons and click-throughs driving traffic to each brand's microsite. Each brand's audience metrics will then be paired with data from Nielsen's Homescan panel, a shopper product that uses ad exposure on TV and the web to determine in-store purchasing behavior.
"Everything is ROI-focused and needs to be accountable," Mr. Fonzetti said. "That's why this program has taken us so long to develop. We want to make sure everybody is comfortable behind this."
The company plans to shift an estimated $20 million in TV ad dollars to the web for more than 15 of its brands, including Lysol, Air Wick, Mucinex, Finish and Clearasil. The strategic shift is significant for the company, which has traditionally spent upward of 90% of its $475 million measured-media budget on TV, and less than $1 million in measured spending on the web in 2008, according to TNS Media Intelligence. Even though its 2008 internet advertising through the first half was already double its full-year internet spending in 2007, it was still only 1% of media spending.
Reckitt-Benckiser's Mr. Fonzetti said the campaign will be measured using a method that combines TV's gross rating points with the web, with additional interactive layers such as online coupons and click-throughs driving traffic to each brand's microsite. Each brand's audience metrics will then be paired with data from Nielsen's Homescan panel, a shopper product that uses ad exposure on TV and the web to determine in-store purchasing behavior.
"Everything is ROI-focused and needs to be accountable," Mr. Fonzetti said. "That's why this program has taken us so long to develop. We want to make sure everybody is comfortable behind this."
CPG, Beauty Marketers Slashed Spending 14% in Fourth Quarter
http://adage.com/article?article_id=135532 The fourth-quarter cuts helped pull spending down 10% for the full year for the 10 U.S.-based companies covered by analyst Andrew Sawyer, including Procter & Gamble Co., Kimberly-Clark Corp., Colgate-Palmolive Co., Clorox Co., Estee Lauder, Avon Products, Church & Dwight Co., Chattem, Energizer Holdings and Alberto-Culver Co.
Of that group, only Colgate, one of the smaller spenders, increased measured media spending in the fourth quarter, according to data from TNS Media Intelligence reported by Goldman. Colgate, along with two of the other smaller spenders of the group -- Chattem and Church & Dwight -– were the only ones to hike spending for the full year.
If that money was shifting to trade promotion, that wasn't showing up in display and feature data from Nielsen Co., also tracked by Goldman. The Nielsen data showed trade support by the companies flat in the fourth quarter after a 5% year-over-year decline in the third quarter. Trade-promotion activity, however, appears to have increased sharply early this year, according to recent Information Resources Inc. promotion data reported by Deutsche Bank.
Research presented by University of North Carolina marketing professor Jan-Benedict E.M. Steenkamp on a Sanford C. Bernstein conference call on Wednesday shows companies that didn't tie their ad spending to business cycles showed annual stock price growth 1.3 percentage points higher than those that did between 1986 and 2006.
Of that group, only Colgate, one of the smaller spenders, increased measured media spending in the fourth quarter, according to data from TNS Media Intelligence reported by Goldman. Colgate, along with two of the other smaller spenders of the group -- Chattem and Church & Dwight -– were the only ones to hike spending for the full year.
If that money was shifting to trade promotion, that wasn't showing up in display and feature data from Nielsen Co., also tracked by Goldman. The Nielsen data showed trade support by the companies flat in the fourth quarter after a 5% year-over-year decline in the third quarter. Trade-promotion activity, however, appears to have increased sharply early this year, according to recent Information Resources Inc. promotion data reported by Deutsche Bank.
Research presented by University of North Carolina marketing professor Jan-Benedict E.M. Steenkamp on a Sanford C. Bernstein conference call on Wednesday shows companies that didn't tie their ad spending to business cycles showed annual stock price growth 1.3 percentage points higher than those that did between 1986 and 2006.
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