DON’T CUT AD BUDGETS
SO HOW IS THE world’s leading marketer – Procter & Gamble – handling the current belt-tightening conditions in the world economy? By not cutting its advertising budget, which amounts to 10,4% of annual sales. That’s like Pick n Pay increasing its ad budget tenfold. To match P&G’s ratio, Pick n Pay would have to spend more than R4bn on advertising, whereas the actual, according to Nielsen Media, is about R400m. The comparison may be unfair, seeing that Pick n Pay is a retailer and P&G a manufacturer of a wide selection of fast-moving consumer goods, ranging from Crest toothpaste to Tide detergent. But it’s nevertheless salutary to see how the global giant handles itself through what it describes as “a cost environment tougher than most P&G managers have ever seen in their careers”. That’s presumably why it’s the world’s biggest marketer.
Another, possibly better, comparison is with Tiger Brands, which would have to increase its adspend fivefold to match the P&G ratio.
Though P&G is operational in South Africa, Unilever – a company of very similar make-up – outranks it. The size of its operations here, and the amount spent on advertising, isn’t publicly disclosed.
There’s plenty of evidence that maintaining adspend in tough times results in market share gains that pay off when the slowdown ends. But not many SA businesses are willing to bet on it.