P&G, Unilever, Wal-Mart aim to innovate

01 July 2009

NEW YORK: Major companies including Procter & Gamble, Unilever and Wal-Mart are all seeking to heighten their emphasis on innovation in an effort to improve their overall positions during the economic downturn.

It has been argued that advertising and innovation are among the first areas to have their budgets cut during periods of financial stress, but are also the sectors which contribute most to a brand's growth both during and after a recession.

According to figures quoted in AdAge, US trademark applications for the period up to the middle of June this year fell by 17% on an annual basis, with the number of patent applications also largely static.

Last month, TNS similarly reported that advertising expenditure in America fell by 14% in Q1 2009, with Procter & Gamble reducing its outlay by 17.8% year-on-year, from $820m (€585.0; £498.7m) to $674m.

However, Bruce Brown, P&G's chief technology officer, told Fox Business News that "innovation is fundamental to our success as a company."

Not only did Brown suggest the Cincinnati-based corporation has an innovation budget which is double that of its main rivals, but he also asserted that P&G would continue to direct resources into this area.

"During this last year when things got tough we have maintained our innovation investment," he said, adding that its capital expenditure actually increased over 2008 as a whole.

Alongside its total spending levels, Brown said the world's biggest advertiser measures its success in terms of "how effective our innovation is."

To take one example, in 2008, Brown said, P&G had "five of the top ten new product innovations in our industry," and the company also had six brands in this position during the downturn of 2001.

Furthermore, P&G's technology chief argued that next year will be "the largest innovation year for us in the last decade."

Similarly, Stephen Quinn, Wal-Mart's cmo in the US, argued the recession is "actually causing us to be longer-term focused, and to think about things like loyalty and lifetime value of the customer and how do we use this opportunity to keep these folks with us for the long haul."

The retail giant employed a new, highly detailed model of its planned marketing outlay last year, which went on to form the basis of the company's 66% increase in adspend in 2008.

"Wal-Mart is a pretty tight ship when it comes to costs, and there is no way that anybody would have approved the spending if they hadn't felt it was going to pay out," Quinn said.

The retail giant has also stopped issuing monthly statements regarding its sales figures, allowing the discounter to emphasise its overall goals rather than focusing on a more limited timeframe.

Quinn said this was partly because Wal-Mart is "a little more confident that we can deliver" in the short-term, allowing it to establish "how do we use this opportunity to build the long-term business."

Unilever's ceo, Paul Polman, has also recently announced that the company would stop giving earnings forecasts for the foreseeable future.

This, he said, will allow the consumer goods giant to utilise its budget more flexibly, such as by adapting its marketing spending to meet changing requirements.

As well as increasing the support behind Dove's Ha

Data sourced from AdAge/Fox Business News; additional content by WARC staff