In mid-December, the sun seemed to be shining on the agriculture industry. Indeed, a front-page story in The Wall Street Journal on Dec. 17 celebrated the strength of agribusiness, citing farm income increases, high beef and commodity prices, and boosts in capital investment.
With this confluence of positive economic indicators, agriculture media companies were anticipating increased marketing budgets from agribusiness. Recently, however, this sunny optimism has met a few storm clouds.
"The first quarter is unfolding soft," said Watt Publishing Co. Chairman Jim Watt, who was anticipating single-digit growth in revenues this year for his publications, which include Watt Poultry USA. "Weâre slightly under last year."
Several factors may be contributing to the tight reins that ag marketers are keeping on their budgets. After two difficult years, it may simply be too early for marketers to anticipate increases in farm income justifying any boosts in spending. Also, an increased emphasis on return on investment may make it tough to justify more marketing spending. And, of course, optimism evaporated with the discovery of mad cow disease on U.S. soil.
Conventional ag industry wisdom holds that farmers flush with cash will make long-delayed investments in tractors and other capital equipment. These investments will then stimulate advertising spending by equipment companies such as Deere & Co.
"There have been three or four or five years without a lot of iron sold, so theyâre trying to play catch-up a little bit," said Scott Mortimer, national sales manager for Successful Farming. The Meredith Corp. publication expects revenue to be up this year, driven by increased capital equipment and pickup truck advertising. Ad budgets flat
But so far, a cross-section of agricultural equipment manufacturers said they plan to do little more than keep marketing expenditures steady. Deere said its budget will remain essentially flat this year, as will those of Agco Corp. (which acquired Caterpillarâs MT tractor line in 2001) and Kinze Manufacturing, which makes row crop planters.
Bill Heick, Kinzeâs manager-product planning and support, said the increased ability to segment targets, with the help of industry trade publications, has made his marketing budget go farther. "We can identify demographics so much better than we could five years ago," he said.
In the seed and crop-protection arena, the conventional wisdom is that budgets are more stable. Greg Nickerson, president of advertising agency Bader, Rutter & Associates, which counts pesticide producer Dow AgroSciences among its clients, said,"If youâre a farmer, every year you have to buy seed and chemicals, so those [market categories] tend not to fluctuate so much year to year."
Nonetheless, Bayer Crop Science said it cut its marketing budget by double digits this year to keep in line with a company mandate that marcomm expenditures produce more measurable ROI.
On the other hand, Pioneer Hi-Bred International, a seed company owned by DuPont, said its budget will remain flat this year. Its spending on print media will remain about the same, but every year the company plants more money in its Web site, GrowingPoints, which enables direct communication with customers and prospects, said Jerry Harringtion, Pioneer sales and marketing PR manager.
In the beef arena, Bill Newham, VP-publishing director of Vance Publishing Corp.âs food systems group, which publishes the beef industry magazine Drovers, said, "Our preliminary estimates were that it was going to be stable or up a little bit, not really strong." He added that an increase in beef prices "doesnât necessarily convert to increased advertising dollars." The mad cow effect
Now that beef prices have fallen in the aftermath of the mad cow discovery in the U.S., an increase in ad dollars seems unlikely.
But the National Cattlemenâs Beef Association, which focuses most of its communications efforts on consumers, has not reduced its b-to-b marketing spending in mad cow diseaseâs shadow. The organization quickly put into effect its crisis communications plan, which included activating a "dark" Web site focusing on the disease, www.bseinfo.org.
The NCBA has also maintained its $3 million b-to-b foodservice advertising budget, according to Mark Thomas, the groupâs VP-global marketing. The trade group plans a special tip-in advertisement in Nationâs Restaurant News later this month.
"We havenât pulled any ads," Thomas said, "and we have no plans to."