Reckitt takes advantage of falling media rates

28 October 2009

SLOUGH, UK: Reckitt Benckiser, the household goods giant, has taken advantage of declining media rates to heighten its advertising and marketing activity this year, helping the company increase its revenues at a time when many of its rivals have seen sales slow.

The Anglo-Dutch organisation has a long-established strategy of concentrating considerable resources behind its 17 "Power Brands", such as Finish and Veet, as well as "local hero brands" in different markets.

Its net revenues rose by 7% at constant prices, to £1.9 billion ($3.1bn; €2.1bn), in the third quarter of this year, with net income also improving by 12%, to £357 million, on an annual basis.

During this period, its marketing expenditure levels actually fell by 9%, to 10.4% of revenues, but its "media activity increased" as a result of "improvements in media buying rates."

Moreover, its total marketing investment was higher than in Q3 2008, as savings from this area were reinvested in "other consumer marketing activities," the company said in a statement.

Bart Becht, Reckitt's ceo, added that its strong performance was "supported by our 17 Power Brands [and] significant investment in media and marketing and successful new product initiatives."

Over 2009 thus far, the Slough-based firm's sales have grown by 7%, to £5.7bn, with profits of £970m, a double-digit expansion when compared with the same period in 2008.

In Europe, revenues are up by 1%, to £2.6bn, with Airwick Freshmatic and Freshmatic Mini among the successful product launches in the region this year.

North America and Australia have provided a 7% uptick, to £1.5bn, with cleaning brands like Lysol, and food products like French's Yellow Mustard, delivering strong results.

Sales in developing markets have also climbed by 15%, to £1.1bn, with Vanish and Dettol among the brands which have received strong marketing support in these markets.

For the year-to-date, Reckitt's "pure media spending" is largely static at constant prices, but its budget for “other consumer marketing” has improved.

The company has also now revised its 2009 revenue growth forecast to the 6% to 7% range, and net income to between 12% and 13%, both up by around two percentage points.

Data sourced from Reckitt Benckiser; additional content by Warc staff