Diageo to cut adspend levels

22 May 2009

LONDON: Diageo, the alcoholic drinks giant, will reduce its advertising expenditure levels this year, but also hopes to increase its share of voice as a result of falling media rates, and to heighten its presence in Africa, Asia and Latin America.

As well as taking a unique approach to consumer planning, Diageo has also championed the idea of major advertisers thinking globally, but incorporating more localised elements into their communications.

Andy Fennell, Diageo's cmo, has stated that "our marketing spend will be down this year, but our effective spend will be up," as "money is going further because of deflation."

Media rates have fallen by up to a quarter in some areas according to Fennell's estimates, which will enable the company to spend more efficiently while maintaining its overall position.

Overall, the head of Diageo's marketing operations argued there is typically "less emphasis on new brands and more on line extensions and different formatting" during recessions, but while it may be "harder to find growth ... it is still possible."

The world's biggest spirits company will be looking to expand in developing regions such as Africa, where its revenues rose by 20% during the second half of last year, and many of its beer brands, particularly Guinness, are performing strongly.

Latin America and Asia will be other target areas, with major brands including Smirnoff and Johnnie Walker, which has enjoyed global success with its Keep Walking campaign – discussed in more detail here – set to received increased support.

Such investment is likely to take the form of promotions in retail chains, while a reduction in product lines and the cost of packaging also slated to form part of the overall cost-cutting programme.

For more information on the latest trends in the alcoholic drinks industry, click here to access WARC's Spotlight on the sector.

Data sourced from Reuters; additional content by WARC staff