Kellogg benefits from boosting adspend

02 November 2009

BATTLE CREEK, Michigan: The Kellogg Company, the cereal giant, posted a double-digit increase in its advertising expenditure during the last quarter, and plans to continue investing in communications over the rest of 2009, as it seeks to further strengthen its brands.

The manufacturer of Corn Flakes and Raisin Bran registered sales of $3.3 billion (€2.2bn; £2.0bn) from July to September, a small drop year-on-year, while earnings per share rose by 5%.

In this period, the Battle Creek-based firm boosted its adspend by a total of 17%, with a similar improvement also slated for the final quarter.

Speaking on a conference call with investors, John Bryant, Kellogg's chief financial officer, said "our commitment to investing in advertising continues to be a key to our business model and to achieving our goals."

"Rather than take advantage of lower rates to reduce the cost of our advertising investment, we see this as a great opportunity to increase our investment and build even stronger brands in the future," he added.

"Higher spend combined with media deflation and a push on efficiency is driving a significant increase in advertising pressure."

The company has also heightened its emphasis on the eight brands which are currently producing the most impressive results, as well as using targeted promotions where necessary.

David MacKay, its ceo, said "during the quarter, these brands grew net sales at a strong 8%, with Special K, Rice Krispies brand and Kashi each delivering double-digit growth."

"This strong growth from our top brands was driven by double-digit increase in our advertising investment, as well as successful promotions."

Data sourced from AdAge; additional content by Warc staff