FMCG Giants Advertise their Way out of America's Economic Woes

07 February 2008

NEW YORK: Leading US consumer goods and food manufacturing firms appear to be maintaining their marketing spend as the nation's economic downturn begins to bite.

Procter & Gamble, Colgate-Palmolive, Kraft Foods and Kellogg all face the necessary evil of increasing consumer prices as they respond to rises in the costs of raw materials.

Most have also chosen to boost ad budgets in a bid to keep customers onside and persuade them that their brands are worth the extra expense.

P&G's measured-media spending was up 15.7% year-on-year in the first two months of last quarter, reaching $708.8 million (€484.9m; £361.9m), according to TNS Media Intelligence; and up 7% to $1.6 billion in its full fiscal year started July 1.

The increases follow two years of essentially flat spend, with a 3.9% hike in 2006 following a 3.5% decline in 2005.

As a result, the world's biggest advertiser experienced a 6% sales increase in the US last quarter, more than double the 2%-3% growth in retail sales it tracked in its categories, and ahead of its 5% organic sales growth globally.

Kellogg ceo David MacKay says the company increased adspend to $1.1bn, or about 9% of sales for the year.

While Kraft chairman/ceo Irene Rosenfeld  has pledged to boost marketing spending to between 8% and 9% of total sales by 2009.

Kimberly-Clark  and Energizer Holdings have also maintained plans to boost adspend and, in both cases, achieved stronger-than-expected organic sales.

Data sourced from; additional content by WARC staff