P&G Marketing Spend Set to Rise

03 May 2007

CINCINNATTI: Procter & Gamble has pledged to significantly hike its marketing budget for the fiscal year starting July 1. The undertaking comes in the wake of unexciting first quarter results which failed to galvanise its stock market price.

The consumer goods giant is set to concentrate its efforts on 'non-measured' media, whilst not eschewing the charms of television.

Its plans are a departure from the last two years when it trimmed reported adspend as a share of sales, peaking at 10.7% in 2004 and slipping to 9.9% in the last financial year.

Cfo Clayton Daley says the priority for the 2008 fiscal year is to "is to sustain strong sales growth. As such, we plan to invest in our leading brand equities. We plan to launch a strong initiative program".

Meantime, chairman/ceo AG Lafley told analysts: "If you step back and look at our [marketing] mix across most of the major brands, it's clearly shifting, and it's shifting from measured media to in-store, to the internet and to trial activity."

Data from researcher TNS Media Intelligence shows P&G spent $459.9 million (€338.7m; £230.6m) in measured media) during January and February, excluding newspaper inserts, which if sustained would cut measured spend by 17.5% in 2007.

But Lafley insisted: "We are still investing a lot in television, because, especially in developing markets, it's a hell of an efficient investment."

TNS data reveal P&G spent 70.4% of its marketing budget on TV during the first two months of 2007, in line with previous years; whereas spend on internet display ads rose slightly to 2.1% of total outlay in the first two months of 2007 (versus 1.6% last year).

P&G's calendar QI figures show sales up 8% to $18.69 billion. The fabric and home-care business led growth, with sales up 12% but the beauty business failed to keep pace with organic sales growth of 5%.

The company's Gillette blades and razor business notched 4% organic-sales growth, while the Braun and Duracell brands' figures stayed flat. Sales for the pet food, snack and coffee business slipped 1%.

However, oral care is booming, according to Lafley, who said there was plenty of room for growth as the company integrates its Crest brand with the Oral-B toothbrush business it acquired with Gillette.

He added: "There is plenty of room for our principal competitor [Colgate-Palmolive] to grow and for us to grow in the oral-care business."

Data sourced from AdAge.com; additional content by WARC staff