P&G plans to boost advertising spend

03 May 2010

CINCINNATI: Procter & Gamble, the consumer goods giant, is planning to heighten its advertising spend this year, having described the reduction in its outlay last year as an "anomaly".

New product launches will be one of the key drivers of this trend, building on the "strategic template" that the company has developed to inform the extension of major brands including Gillette and Olay.

"Going forward, we will continue to invest behind the strong multi-year innovation programme to expand portfolios vertically, horizontally and into geographic white space," said Jon Moeller, its cfo.

"We will also continue to upgrade existing product offerings, improving value for consumers."

In order to demonstrate P&G's credentials in this area, Moeller cited figures from IRI's Pacesetter Report, which aims to identify the most successful new lines rolled out in the US each year.

P&G had five of the top ten such offerings in the "non-food" consumer goods segment in 2009, a group that included Tide Total Care and Gillette Venus Embrace, and was made up of premium additions to its portfolio.

More recently, it has introduced high-end goods including Ariel Excel Gel, Fairy Platinum, Crest 3D White and SK-II Cellumination in various markets across the globe.

"Premium innovations increased consumer value through enhanced product performance and continue to perform well," Moeller said.

Simultaneously, "mid-tier" items like Olay Natural White have been made available in a number of countries in Asia, while a new Gillette Mach 3 shaver has also just gone on sale in the "value tier" in India.

"There's a meaningful group of price-conscious consumers who continue to look for lower prices," Moeller continued.

"These consumers are driving double-digit increases on brands like Gain, Pampers Simply Dry, Naturella, Bounty Basic and Charmin Basic."

Procter & Gamble's selling, general and administrative expenses rose by a total of 210 basis points during the first quarter of this year.

According to Moeller, this uptick was attributable to "higher marketing spending, which was increased to fully support our strong innovation programme."

Prominent communications efforts run by the company in Q1 included the multi-brand Thanks Mom campaign which ran during the Winter Olympics, held in January in Vancouver.

Elsewhere, P&G unveiled its Future Friendly platform, which aims to reach 50 million consumers in the US, and encourage them to adopt more eco-friendly habits.

It also allied with Wal-Mart, the retail giant, to fund and produce a family-friendly TV movie, called Secrets of the Mountain, which was broadcast on NBC on April 16.

Tracking studies showed that 93% of mothers awarded Secrets of the Mountain a positive rating, while 88% said it was of excellent quality and 74% praised the ads for P&G's products shown during the breaks.

Overall, Procter & Gamble said that purchase intent for these brands climbed by 270% as a result of this initiative, while also delivering other major benefits.

"As the world's largest advertiser, we have a responsibility and an obligation to improve the quality of ... programming," Bob McDonald, its ceo, argued.

"It's in our best interest to do that because it makes our advertising more effective."

More broadly, P&G is looking to boost its number of media impressions by 20% in 2010, with a particular emphasis on the fourth quarter, when it will roll out its reformulated Pantene brand in the US.

As rates could rise across many media channels this is likely to require an increase in its outlay, but the company is also targeting "non-traditional" platforms, from digital media to advertiser-funded content.

Data sourced from Seeking Alpha; additional content by Warc staff