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Friday, May 1, 2009

Global Recession Helping P&G Get More Media For Less Money

The company benefited from declining media rates and its negotiating power as the biggest buyer in many markets.

(from AdAge.com) -- Procter & Gamble Co. cut marketing spending more than $440 million globally last quarter, yet still increased media weight or impressions 5%, executives said today, and the company is eyeing more cost concessions from media as the TV upfront nears.

In all, marketing-spending cuts by the world's largest advertiser, including traditional advertising and shopper marketing, amounted to 2.4% of sales, a P&G spokesman said. Yet because of sharply falling media rates around the world, the company actually increased media weight about 5%, P&G CFO Jon Moeller said on an earnings conference call today.

It's unclear how much of those cost efficiencies came from P&G's biggest medium, TV, in its biggest market, the U.S. But Chairman-CEO A.G. Lafley said it is looking to get even deeper cuts in upfront negotiations, when TV networks look to sell up to 80% of their ad inventory for the year, starting next month.

“In the near-term, the media world could be even a bit more of a buyer's market, and not just in the U.S.”, Lafley said. “So what we've tried to do is take our market-mix modeling and our market ROI analysis and figure out how to spend a little less money and get a lot more delivery."

Buying leverage as the biggest advertiser in most markets helps, he said. "We don't look at it on a month-to-month, quarter-to-quarter basis necessarily, but our goal over time is to strengthen our brand equities, and part of that is delivering a consistent share of media voice."

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