Indian FMCG firms cut adspend

20 May 2009

MUMBAI: Several major FMCG companies in India reduced their adspend levels in the first quarter of 2009, opting either to take advantage of lower media rates to maintain their share of voice or to delay their spending until later this year.

Godrej Consumer Products, which sells a variety of personal care and household brands, made the largest reduction, slashing its outlay by 85% compared with the same period in 2008.

Adi Godrej, the company's chairman, argued the firm decided to "cut ad spends during this quarter as we gear up for Indian Premier League-related promotions in the coming quarter."

Marico, which owns 15 different brands, also cut back by 20% in Q1, while Emami, which operates in the personal and healthcare categories, did so by 7% over the same period.

However, Aditya Agarwal, group director of Emami, said the company will double its ad budget from April to September compared with the previous three months, and would be looking at a mixture of "mass media marketing" and "below-the-line activities."

Despite their overall reductions in spend, these firms have actually been able to at least maintain their share of voice according to Draft FCB Ulka's ceo Ambi M G Parameswaran, who argues that "for every rupee that companies spend, the returns are 120%."

Hindustan Unilever, one of India's biggest advertisers, did increase its advertising outlay by 3% in Q1 on an annual basis.

However, the Business Standard reports that the company's marketing spend as a percentage of its net sales actually fell by 40 basis points year-on-year during from January to March this year.

As such, while its sales contracted by 4% in the first quarter compared with the same period a year ago, HUL managed to boost its profit margins by some 300 basis points as a result of the reductions in both its commodity costs and marketing spend.

More positively, Proctor & Gamble heightened its adspend levels by 47% in Q1, with Dabur also growing its outlay by 30% to support new product launches.

Data sourced from Business Standard; additional content by WARC staff