A-B SETS $70 MILLION HIKE IN '98 AD SPENDING

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After diverting much of its 1997 marketing dollars to price promotions, Anheuser-Busch plans an about-face, boosting its 1998 ad spending 25% to more than $300 million.

The No. 1 brewer plans to throw most of the additional weight -- some $70 million -- behind leading brands Budweiser and Bud Light, although the Michelob family will get an increase as well.

A-B plans to focus more on ethnic marketing as well by boosting Hispanic-targeted advertising and working more with film director Spike Lee.

"We didn't like losing some of the marketing and image we lost this year," said Bob Lachky, VP-brand management, when A-B "reduced some of our marketing expenditures to compete on price."

A FRUSTRATING '97

This year has been a frustrating one for A-B. The entire industry was wracked by price reductions and promotional discounting, some of it initiated by No. 2 Miller Brewing Co. A-B already has announced it won't initiate front-line price increases early next year but will reduce discounting.

On top of this, the brewer demoralized its ad agencies by cutting retainers and slashing fees. Some industry officials familiar with the brewer questioned whether A-B had a coherent marketing strategy, helping fuel rumors that it was looking outside for a new marketing manager. The brewery has repeatedly denied that.

A-B is hoping 1998 will be different. There are signals beer prices will rise next year.

Of the $70 million increase in advertising, $40 million is earmarked for non-sports network TV programming, an area the brewer has not been active in lately, Mr. Lachky said.

Current budgets were not disclosed, but Competitive Media Reporting puts the brewer's 1996 measured media spending at $282.9 million; 1997 spending is expected to be close to that level.

A-B will devote most of the ad time to flagship Bud, which continued a nearly decade-old sales decline this year despite some optimism the brand would flatten out (AA, Sept. 8).

Mr. Lachky estimated 1997 sales by volume would be down 1% to 2%, still its best performance in five years.

In that vein, the brewer plans to devote most of its eight 30-second slots on Super Bowl XXXII to Budweiser, Mr. Lachky said.

The brewer next year will continue its strategy of running humorous ads aimed at young adults and more serious ads touting the brand's quality and heritage -- from lead agency DDB Needham Worldwide, Chicago, and Goodby, Silverstein & Partners, San Francisco. About 80% of the ads will be the humorous ads for young adults, he said.

A-B has been using Mr. Lee as an idea resource, and next year the brewer might enlist his agency, Spike/DDB, New York, to handle some ads for Bud, Mr. Lachky said.

Not returning for Bud, at least to TV, is Gus the freshness guy. The Gus campaign has accomplished its mission of establishing freshness as a selling point and the character will be restricted to radio and live appearances, the executive said.

Meanwhile, A-B expects Bud Light sales to rise 10% by yearend, its fifth straight year of double-digit growth.

A-B is sticking with its longtime Bud Light ad strategy, that of featuring people going to great lengths to get the brew.

CHANGES FOR OTHER BRANDS

A-B is planning to change campaigns for other brands. It will boost spending on a new print and TV campaign for the Michelob brands, which were backed by just $3.7 million during the first six months of 1997, down 71.6% from the year-earlier period, according to CMR.

Leap Partnership, Chicago, took over the Michelob account this year. Agency President Tom Sharbaugh is a former top A-B marketing executive.

The brewer will stick with its "penguin" campaign from Goodby for Bud Ice, and plans to spend about $15 million on the brand in 1998, consistent with 1996 spending. Most ads will run during the hockey season, to tie into the brand's National Hockey League sponsorship.

Support for the subpremium Busch brands will be outdoor advertising.

A-B is planning on making some moves in ethnic marketing, boosting its budget for Hispanic efforts and targeting different components of the Hispanic

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