P&G Sales Up, but Adspend Drops

31 October 2008

CINCINNATI: Procter & Gamble, the world's biggest advertiser, posted organic sales growth of 5% in Q3 2008, taking quarterly revenues to $22 billion (€16.8bn £13.3bn). Marketing expenditure, however, fell by some 11.9% in the first half of that period, according to TNS Media Intelligence.

P&G met its sales target for the seventh successive quarter, with net earnings rising 9% to $3.3bn.

Its beauty division (+6%) and coffee brands (+7%) performed strongly, as did many of its value offerings; its Luvs diaper brand, for example, posted growth of 30% year-on-year.

The company's adspend over the first two months of Q3, however, fell to $498 million, and the total cut in marketing spend could reach $100m when the full data for third quarter is released, says TNS.

This follows on from estimated cuts in adspend of some $250m in the second quarter of the year. 

According to P&G's estimates, the increasing price of commodities reduced its gross margin by 2.4% in Q3, though this was offset by a number of cost-cutting and tactical initiatives across the company.

According to chairman/ceo Alan G Lafley, these changes include "organizational, structural simplification [and] work processes that enable us to focus on the fewer things that deliver the most value."

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