Marketers may be branding more, but they're spending less to do it.
With inventory demand down and media rates softening, a growing chorus of
marketing heavyweights including Unilever, Colgate-Palmolive Co., Alberto-Culver
Co., Burger King and McDonald's have all in recent weeks claimed to reap an
improved bang for the buck on their media in the last quarter, or say they will
do so this year.
Walmart is the latest to say it's saving money on media so its shareholders can
live better. "Media costs have come down rapidly during the last year
because of the more difficult economic environment," Eduardo Castro-Wright, CEO
of Walmart U.S., said on a May 14 earnings call. "As a result, our
marketing team reduced advertising costs by more than 20% through more efficient
media buying and a precise focus on our message." Yet he said Walmart's
share of voice increased 67% over a year ago.
He didn't say Walmart necessarily had increased media impressions. How
much of that 67% improvement in share of voice came from more reach per dollar,
rather than recession-wracked competitors slashing spending, is something the
company declined to comment on. But a person familiar with the retailer
said: "I haven't seen as much of that cute little dog on TV lately," referring
to rival Target's pit-bull mascot.
Walmart spending less isn't particularly good news for the media industry, as it
was one of few bright spots last year. Its spending, as measured by TNS
Media Intelligence, was up 62% to $863 million, more than a $330 million jump.
Walmart probably was getting some extra mileage from its buy last year, too.
For its fiscal year ended Jan. 31, it reported ad spending up $300 million, but
that was only a 15% increase to $2.3 billion globally. That covers not
just the Walmart brand in the U.S. but also international and Sam's Club, which
account for about a third of the retailer's $401 billion in global sales.
Walmart isn't the only one claiming big savings. Procter & Gamble Co. last
quarter said ad spending as a share of sales declined about 2.4 percentage
points, or $440 million, yet increased media impressions by 5% globally.
L'Or"al also smells a bargain. "We are holding to our plan to increase our
advertising and promotional spend while looking to achieve even greater
efficiencies in our media buys for 2009," Joseph Campinell, president of L'Or"al
USA's consumer-products division, said in an e-mail statement.
While this pricing appears to be soft in some media and markets, there's still
skepticism that marketers have saved big - yet - on TV in the U.S., which might
comfort networks going into the upfront next week.
While the market is weak, there was little indication from the financial reports
or conference calls of TV and cable media players last quarter that pricing had
eroded yet, and media executives say the networks have been trying to hold the
line on pricing. And according to people familiar with direct-response
markets, big conventional marketers haven't made major shifts of dollars into
remnant inventory recently.
One analyst said P&G Chairman-CEO A.G. Lafley sounded a bit less confident than
Chief Financial Officer Jon Moeller about that 5% increase in media impressions
on an April 30 conference call. "We have been delivering more [gross
rating points] to the market," Mr. Lafley said. "It's always hard to
measure, but we think in a lot of cases we are actually building our shares of
voice."
|