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Marketing being cut across the board
Jul/21/2008 06:52 Filed in: Marketing
Environment
Marketers are going to have to learn to do a lot more with less. Internet media companies will do well as more dollars are going to be shifted from TV and print to the Web. However with the shift in dollars marketers are going to have to show the ROI of everything they do especially the Web. No more awareness and reach and frequency numbers..now it’s all about the bottom line and driving sales. Sales are how marketers are going to be measured straight and simple.
Here is the story from Ad Age this morning:
The biggest of them all -- P&G -- last week appointed as its new Global Marketing Officer Marc Pritchard, who spent eight years in finance compared with only six in brand management and marketing. The new steward of P&G's reported $7.9 billion global ad budget has spent the past two years developing corporate cost-cutting initiatives and before that was known by marketing executives who worked with him for his keen eye on spending.
The country's No. 2 advertiser, AT&T, meanwhile, is in a period of transition as its marketing chief, Wendy Clark, departs the company, leaving a question mark about how her successor will manage its massive $3.2 billion budget.
Its new top marketing executive, Marc Pritchard, has spent the past two years developing corporate costcutting initiatives and is known for keeping a keen eye on spending.
GENERAL MOTORS CORP.
The automaker has already slashed its measured-media spending nearly $1 billion from 2005 to 2007 and is looking to cut more and shift more dollars to digital amid a round of restructuring.
COCA COLA CO.
Wants to save between $400 million and $500 million a year by the end of 2011 and is looking to wring some of that from marketing. It will use global campaigns and "optimize" shops.
NISSAN NORTH AMERICA
Though the company wouldn't comment, execs said it is trimming $100 million from its ad spending in the fiscal year that started April 1 to meet an aggressive profit target set by CEO Carlos Ghosn.
ANHEUSER-BUSCH
Historically frugal InBev's $52 billion buyout of free-spending beer marketer A-B has agencies girding for a pullback on its $1.3 billion budget -- even as the acquirer denies it.
Auto slowdown
Others in the auto industry, the biggest ad-spending category behind retail in the U.S., appear to be following GM's lead as it adjusts to one of the slowest sales years in recent history and to Americans' quick shift to smaller, more-fuel-efficient vehicles.
Nissan North America is trimming $100 million from its ad spending this fiscal year that started April 1 to help meet an aggressive profit target set by Nissan Motor Co. CEO Carlos Ghosn, according to two former executives. The ad dollars are being moved to the incentives bucket, needed to move big trucks out of showrooms, they said. A Nissan spokesman declined comment.
Meanwhile, Coca-Cola wants to save between $400 million and $500 million a year by the end of 2011 and wants to find some of those savings in marketing.
In a second-quarter earnings call with analysts July 17, newly minted Coca-Cola CEO Muhtar Kent said as the company undergoes an aggressive review of spending, marketing will be a primary area of focus.
The company will look to reduce "nonconsumer-facing" programs through global campaigns. It will also leverage best practices for creative and overall execution, as well as optimize its use of agencies. As an example, Mr. Kent said Coca-Cola recently completed a global marketing research agreement that will replace a number of local agreements.
"Our objective is to reinvest marketing efficiencies ... that we realize into efficient brand-building activities to drive the long-term health of our business," he said.
More direct-marketing
Coca-Cola Exec VP-Chief Financial Officer Gary Fayard said that given the economy, the company is maintaining a "disciplined" approach to marketing. That entails an increase in total direct-marketing spending vs. planned spending, as well as reallocation of funds against certain geographies to drive growth.
The soft-drink giant's strategy to reduce costs through increased use of global campaigns is an approach similar to that outlined by Unilever Chief Financial Officer Jim Lawrence earlier this year.
Historically frugal InBev's $52 billion buyout of free-spending American beer marketer Anheuser-Busch also has agencies girding for a possible spending pullback. And some A-B agency executives said they simply don't see how InBev's philosophy of zero-based budgeting can mesh with A-B's prolific approach to brand marketing.
While package-goods companies broadly have been talking about cutting overhead to maintain marketing spending, managers at analytics firms say the companies also have been actively testing models to project how successfully they can raise prices without losing out to private labels -- and the impact of shifting funds from media advertising to trade promotion and other areas of shopper marketing.
A combination of a hard times and internal austerity measures often has meant a back-to-basics movement for P&G and others -- and quite possibly a resistance to any experimental marketing that doesn't have proven ROI.
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