DON’T CUT AD BUD­GETS

Finweek English Edition - - Advertising & Marketing -

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.

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