Cost Cuts Are in Store for P&G and Unilever

After years of big run-ups in marketing spending, packaged-goods giants Procter & Gamble Co.and Unilever are trying to modify their increases and talking more about how to save money, which isn't exactly great news for agencies, production companies or the media -- unless you're in digital. Both marketers are focusing on digital with its nearly bottomless well of media inventory and ample opportunities for "earned" media.

P&G boosted ad spending $1.8 billion to $9.3 billion during the past two years. Unilever has added more than $1 billion to annual spending compared to three years ago to reach $8.2 billion in reported spending last year.

Both also have said they plan to spend more this year, but want to at least moderate the increase. P&G doesn't plan to increase its ad-spending-to-sales ratio this year after watching it rise more than two points to 11.3% last year. Unilever carved 0.7 points off its ratio to 13.3% last year.

http://adage.com/article/news/cost-cuts-store-p-g-unilever/232539/

Campbell Soup Vows to Hold Line on Marketing

http://adage.com/article/news/campbell-soup-vows-hold-line-marketing-economy/229611/

Despite a weakening economy, Campbell Soup Co. is not backing off its plans to plow more money into innovation and marketing and cut back on heavy discounting.

The company, which is trying to reverse sluggish soup trends by putting a new focus on taste, on a quarterly earnings call Friday reaffirmed its plans to put an additional $100 million into marketing and innovation in fiscal year 2012, which began Aug. 1. "The recovery has not progressed at the pace or intensity consumers had hoped for," said CEO Denise Morrison. But "in this environment it is critical for us to deliver meaningful innovation focused on consumer needs and to differentiate our brands through effective marketing that emphasizes our products' tangible benefits and value relative to the competition."

Campbell, like other food marketers, had been engaging in heavy promotional activity, but found that discounting has failed to raise volume as planned. For the fiscal year ending July 31, Campbell sales across all of its businesses increased by just 1%, while its U.S. simple meals sales -- which include soup -- dropped by 6%, the company reported. Net income for the year dropped 5% to $805 million, and fourth-quarter net earnings fell to $100 million from $113 million.

Unilever CMO says company will double digital spending this year

http://www.marketingmag.ca/english/news/cannes/article.jsp?content=20100625_162635_7732

"We are in the middle of a digital revolution,” said Weed, repeating a common refrain this week, though he added: “I think it is even bigger than the most stretchy of visions.”

Sorrell asked what percentage of the Unilever marketing budget is going to digital today. Weed wouldn’t say. “What I can tell you is that this year, we will double our spending on digital.”

However, he also acknowledged there is still more talk than action online. Digital marketing is like high school sex, he said: Everyone is talking about it, fewer are doing it and those that are, aren’t doing it very well.

Sorrell suggested that while digital marketing is good for one-to-one communications, it’s mostly for promotional and tactical purposes.

“Do you think the jury is still out on the effectiveness of digital for brand-building?” he asked.
“I have quite the opposite view,” said Weed.

“The best way to get to a mass audience is through TV,” he said, and that will remain the case for years to come. “I’m going to need fabulous moving picture creative.”

But digital can build brands, he said, citing Ben & Jerry’s one million fans on Facebook. Those are people engaging, sharing comments and talking about your brand. “That is something you can’t do in mass TV.”

Turning to social media, Sorrell again seemed skeptical of some of the excitement. Social media is effectively the modern form of letter-writing, said Sorrell. And because of that users may not want it “bastardized” by marketers.

“When [social media platforms like Facebook] try to monetize it, they have fallen foul of even the most loyal users.”

The letter-writing analogy fits, agreed Weed, suggesting Unilever’s goal is not to insert itself into those conversations, but rather have those conversations include Unilever.

The goal with Axe, for example, is to get guys chatting about the brand and building buzz. “What we are doing in social media is nothing more than that,” he said. “It is word of mouth on steroids.”

Benjamin Moore Puts $11 Million into Social Networking

http://promomagazine.com/viralmarketing/news/0513-benjamin-moore-social-networking/

Benjamin Moore is going after its large fan base—and new customers—with a $15 million campaign, of which 76% is earmarked for social networking.

The campaign centers on eight top design and paint industry experts who may not be household names, but are experts recognized and respected in the design world, like Jamie Drake, whose clients include New York Mayor Michael Bloomberg and Superstar Madonna.

As for Facebook, Benjamin Moore plans to aggressively use the social networking site and Twitter (@Benjamin_Moore) to connect passionate brand customers and potential customers with the eight experts in the “Expert Exchange.” Other experts will regularly join the site to participate. Since the print ad appeared earlier this month Facebook fans have grown from 5,000 to 15,600.

Consumer-Goods Makers Pour Out Ads

http://online.wsj.com/article/SB10001424052702304703104575174042139131092.html?mod=dist_smartbrief

As wary Americans start to crack open their wallets, household-goods makers like Procter & Gamble Co., Colgate-Palmolive Co., Kimberly-Clark Corp. and Clorox Co. are cranking up their advertising, hoping to coax consumers farther out of their shells.

Amid signs of an improving economy, recent survey data show consumers are more willing to splurge by eating out or buying new shoes, but the same doesn't necessarily hold for everyday household goods.

Major consumer-products makers are expected to spend an average 9.7% of their annual sales on advertising this year, up from 8.6% in 2009, Sanford C. Bernstein analyst Ali Dibadj said in a recent research report.

P&G, the world's biggest ad spender, plans a 20% increase in "consumer impressions," or instances when consumers see its ads, during the fiscal year ending June 30. The Cincinnati-based maker of Pampers diapers, Crest toothpaste and Pantene shampoo says it will introduce 30% more "significant" innovations in products this year, which CEO Robert McDonald describes as the most in his 30-year career at the company.

Kellogg Increases 2010 Ad Spend, Triples Social Media

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=122709

Multiple marketers, including Kraft, have recently spoken about lower pricing helping ad dollars go further in 2009. Now, Kellogg appears to be the first to signify that the more bang-for-buck trend will continue into 2010.

Also, the company is moving aggressively into social media, Bryant said, tripling spending over the past three years and experiencing "great returns on this investment." He did not offer specifics, but cited a Facebook Pop-Tarts page and Special K initiative as effective.

Separately, Kellogg has made efforts to improve the health benefits of its products, notably with cereals targeted at kids. There has been pressure from interest groups and some legislators for food marketers to help fight child obesity.

Bryant acknowledged the "intense increase in awareness around nutrition and health and wellness" and said the company believes its "portfolio is well placed" to compete effectively as it tinkers with products.

Digital Agency Will Take Over Advertiser’s Creative Account

In another sign of the growing importance of digital advertising, an agency that specializes in interactive work is being named to handle the entire creative assignment for a marketer of financial services.

R/GA in New York, part of the Interpublic Group of Companies, is to be named on Wednesday as the creative agency of record for Ameriprise Financial. The assignment to create campaigns for Ameriprise, with annual spending estimated at $30 million, had been handled for the past four years by Saatchi & Saatchi in New York, part of the Publicis Groupe.

Although R/GA “is known for its digital work,” said Kim M. Sharan, chief marketing officer at Ameriprise in Minneapolis, the agency “brought us some fresh creative ideas” that warranted naming R/GA to create campaigns in all forms of media.

Of course, the digital experience of R/GA factored into the decision, too. In reaching its desired audience of consumers who are, as Ms. Sharan put it, ages “40 to 65-ish,” advertising online “has been, and continues to be, an important area to beef up,” she said.
http://mediadecoder.blogs.nytimes.com/2009/12/02/digital-agency-taking-over-advertisers-entire-creative-account/

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

http://adage.com/article?article_id=138201
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.

At Unilever, Digital's Not Just for Mature Markets

http://adage.com/digital/article?article_id=137281

The consumer-goods giant is close to concluding a review to name its first and one of the marketing industry's first truly global digital-agency rosters to help carry out a global digital strategy developed with input from such digerati as Federated Media Chairman John Battelle and BlogHer co-founder Jory Des Jardins.

The digital roster, believed likely to include Sapient and an entry from WPP incorporating several agencies into a single unit, will have five to 10 agencies in all, from which Unilever's global brands will choose, Mr. Rangaiah said.

P&G Gets 5% More Media for $440 Million Less

http://adage.com/article?article_id=136393
Procter & Gamble Co. cut marketing spending more than $440 million globally last quarter, yet still increased media weight or impressions 5%, executives said today, and the company is eyeing more cost concessions from media as the TV upfront nears.
In all, marketing-spending cuts by the world's largest advertiser, including traditional advertising and shopper marketing, amounted to 2.4% of sales, a P&G spokesman said.
That means P&G's marketing cuts last quarter amounted to about 5% of its reported advertising spending for the entire fiscal year that ended last June. If sustained for a full year, last quarter's spending level likely would reduce the company's ad-to-sales ratio to its lowest level in at least 15 years.
Yet because of sharply falling media rates around the world, the company actually increased media weight about 5%, P&G Chief Financial Officer Jon Moeller said on an earnings conference call today.

Drug Firms' Spending on Consumer Ads Fell 8% in '08, a Rare Marketing Pullback

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.

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.

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

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."

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.

P&G reins in ad spending

http://news.cincinnati.com/article/20090314/BIZ01/903140319/1001/BIZ

Cincinnati-based P&G spent $2.85 billion last year, down from $3.53 billion in 2007, Nielsen reported. Despite the decline, P&G was still the nation's top advertiser, ahead of General Motors, whose spending fell 14.9 percent, and AT&T, whose ad spending fell 7.2 percent.

But P&G's budget-cutting - it spent $683 million less on advertising in 2008, Nielsen found - has trickled down to the many small- and mid-sized agencies in Greater Cincinnati that work on P&G-related projects. "P&G is tightening its belt and asking for greater efficiencies," said Jack Streitmarter, president of Cincinnati-based audio and digital agency Sound Images.

When the Going Gets Tough, P&G Gets Philanthropic

http://www.brandweek.com/bw/content_display/news-and-features/direct/e3i801548f98188f77a4b15553d1d559b90
Procter & Gamble, which has made the “value” argument to consumers in this down economy, is adding another one: Buy our products and some of the money will go to charity.The company’s expanded embrace of cause marketing comes as P&G and charities alike feel the heat from the recession. P&G’s second quarter total sales fell 3.2 percent to $20.4 billion.
The topic was top-of-mind for many P&Gers during a recent company discussion on value. Held in Cincinnati, the panel included bringing in outside influencers—namely, a mommy blogger, a financial expert and a celebrity stylist—to brainstorm different ways of defining value in the current economic times. Several participants brought up the need to leverage cause marketing, but only on brands for which it made sense. (All three programs contained in this month’s brandSaver exist independent of the coupon booklet. An initiative linking Pampers to the prevention of neonatal tetanus, for instance, was founded in 2006.)

Coke Says Agency Roster Cut by Half

http://adage.com/article?article_id=134595
During the company's fourth-quarter earnings call, CEO Muhtar Kent said the marketer has slashed its agency roster by more than half. "We have consolidated our agencies," he said. "Agency numbers have gone down by more than half, and I think we have driven a lot of efficiencies in our marketing, our market research costs, in our marketing over the past 12 months."

A-B InBev Ignites Brewing Brouhaha

Ad sales execs are defying an Anheuser-Busch InBev directive that would have them wait as many as 120 days to be reimbursed for airtime, telling the Belgian-owned brewing giant to stick its ultimatum where the “zon don’t schijnen.”According to mulitple sources, all major broadcast and cable nets have condemnedA-B InBev’s unilateral order, refusing to comply with what one sales exec called “a shakedown.” The brewer has yet to respond to the opposition, which began fermenting on Feb. 5, after A-B InBev sent its media suppliers a letter spelling out the new payment schedule.

http://www.mediaweek.com/mw/content_display/news/national-broadcast/e3i801548f98188f77a3b9fb20321beec85

“Effective March 1, 2009, Anheuser-Busch ... will adopt the A-B InBev policy governing payment terms for media supplier invoices at 120 days,” read the memo, which was signed by vp, procurement, Tom Adamitis and vp, finance, David Almeida. A-B InBev added that a failure to respond by Feb. 28 would constitute compliance.

Online social-media firms, P&G to meet

http://news.cincinnati.com/apps/pbcs.dll/article?AID=/AB/20090227/BIZ01/902270360/

Procter & Gamble will host a digital meeting of the minds next month at its downtown headquarters as senior executives from the emerging world of online social media meet with marketing executives from the Cincinnati-based company.

Executives from major online destinations Google, Facebook, MySpace and Twitter are reportedly among those invited to the March 11 event, although P&G would not confirm the guest list. More than 100 people are expected to attend, P&G spokeswoman Martha Depenbrock said, with about 20 percent coming from the digital companies.