US advertisers exploit low media rates

19 May 2009

NEW YORK: A majority of US marketers intend to increase their adspend levels at the end of the downturn, but major advertisers like Procter & Gamble, Wal-Mart and Unilever are also looking to make the most of low media rates to boost their share of voice in the short term.

While many brands typically reduce their marketing spend during periods of wider financial stress, an analysis of several previous such periods has found that taking the opposite approach leaves brands in a stronger position in the long term.

Based on a survey of 129 marketers, the Association of National Advertisers has found that over 66% of respondents plan to boost their advertising expenditure after the recession.

A similar number argued that they were increasingly looking towards short term results, while 73% reported that they would begin to spend before the end of the financial crisis.

Within this, over 70% will heighten their outlay three months before the start of the recovery, with 30% pegging this figure at six months before the end of the recession, which Sir Martin Sorrell has previously predicted will be "L-shaped."

Some 74% of respondents also said that building "brand equity" was essential to their activities, with a further 89% of marketers stating that the product itself was "very important" in driving this metric.

By contrast, 86% of participants cited customer service as the key to brand equity, with 81% handing this status to employees, 80% to a brand's website, 78% to marketing and CRM, 74% for field sales, and 73% to advertising.

However, Unilever's ceo Paul Polman has argued that while the industry is only at the "end of the beginning" of the downturn, there is "no better time" to boost spending.

This is because "a lot of others will cut support", giving brands who maintain expenditure levels a chance to "stand out even more and build strong franchises."
Eduardo Castro-Wright, vice chairman of Wal-Mart, similarly argued that as "media costs have come down rapidly," the company has "reduced advertising costs by more than 20% through more efficient media buying and a precise focus on our message," but boosted its share of voice by 67%.

Procter & Gamble's cfo, Jon Moeller, also recently reported that the consumer goods giant sees the "current economic environment as an opportunity to increase share of voice within our industry while spending fewer dollars in the absolute."

Chrysler, the ailing automaker, is also utilising a new modelling system, developed by digital agency Organic, to help direct its adspend more effectively

The auto manufacturer's ad budget has been halved by the US government, and the new system aims to measure the amount of web traffic generated by ads, set against a benchmark of the average amount of "clicks" typically required for the company to hit its sales targets.

Susan Thomson, Chrysler's director of media and events, argued the system offers "some science" and "helps me be smarter about the dollars I need to reach the sales goals we are responsible for."

Data sourced from AdAge/Wall Street Journal; additional content by WARC staff