With Media Savings in Hand, RB to Boost Spending in Promotions

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Reckitt Benckiser -- or RB as it's re-branding itself -- had been virtually the only publicly traded package-goods player to maintain its advertising-to-sales ratio amid the recession. Now it's joining peers in plowing claimed savings from media rates into more promotion spending.

We have spent our money on other touchpoints with consumers [last quarter] which are either cheaper or they don't fall into the same financial line as marketing spending," Mr. De Groot said. "It's a slight change on the [profit and loss] line, but it's in line with our strategy of the past 10 years," which he said was to focus on innovation and the company's power brands.
Part of the media shift includes increased use of online video and print. "We're not reacting after one or two months of data" to the stepped-up use of online video ads, he said, though he said early results look favorable at least for some brands.
Promotion also is on the rise in part because competition, consumers and retailers are moving that way. Retailers, with an interest in preserving their own same-store sales numbers, are pushing for more as an alternative to lower list prices as both volume and commodity costs fall. Overall, unit volume was down across RB's categories 3% to 5% last quarter, Mr. De Groot said, and promotion is one way all players are looking to get it into positive territory again. "There's a reluctance to bring the prices back to where they were before on all sides," Mr. De Groot said. "That means you're trying to convince consumers in a different way."
Higher-priced initiatives launched earlier in the year are faring well, Mr. De Groot said, including Airwick's iMotion motion-activated air freshener, which helped RB increase sales and share in a discretionary category hard hit by recession, he said, and the company's new Finish Quantum laundry tabs.