AD SPENDING ESCAPES KODAK'S AX: BUDGET OF $110 MIL TO RISE, EVEN AS PHOTO GIANT CUTS $1 BIL ELSEWHERE

By Published on .

Despite an effort to ax $1 billion in expenditures over the next two years, Eastman Kodak Co. said it plans to increase its $110 million U.S. consumer ad budget.

At a news conference last week to announce 10,000 layoffs worldwide and other budget cuts, President-Chief Operating Officer Daniel Carp said Kodak will make "a significant increase in advertising spending across television, radio and print media." Counting business-to-business, Kodak spent $130 million on ads last year.

SPENDING SHIFT TO BEEF UP ADS

Carl Gustin, senior VP-chief marketing officer, told Advertising Age Kodak would not raise its estimated $200 million marketing budget but would shift spending from trade shows, direct marketing, promotion and merchandising to consumer advertising.

The added spending will support new camera and film products in 1998 and continue support behind the Advantix line and traditional film.

Kodak also said it will further reduce film prices to narrow the gap opened by Fuji Photo Film USA's significant price drop earlier in the year -- bringing Fuji a 5-point increase in U.S. market share.

Kodak early in 1997 put its share of the U.S. film market at 60% to 70% and Fuji's at 10% to 20%.

"We do believe in the premium of our brand," Mr. Gustin said, even though Kodak is cutting film prices.

STRENGTHENING BRAND

Explaining the unusual strategy of increasing ad spending even as the company makes significant cuts elsewhere, he said Mr. Carp and CEO George Fisher "agree on the need to strengthen the brand and value position of the products. If film were an absolute commodity, [a price] strategy would work, but it's not."

Mr. Gustin added that Kodak will stay the course with its product-oriented brand advertising and next month will begin evaluating new ads from Ogilvy & Mather Worldwide, New York.

O&M executives had no comment on that work.

In the next year, Kodak also will re-emphasize its retail relationships.

"Our strategy is to build on and expand the existing retail infrastructure," Mr. Fisher said at the news conference.

In August, Kodak unveiled its upscale Image Center Solutions store concept, which will convert up to 400 photo specialty stores nationally through 1998 (AA, Aug. 18).

MOVING INTO MOVIE THEATERS

The Kodak brand also will be expanded into U.S. movie theaters through Kodak Entertainment Centers. Moviegoers will be able to digitally insert images of themselves into pictures featuring film stars or the likes of the Tyrannosaurus Rex from "The Lost World: Jurassic Park."

That equipment is similar to Kodak's Image Magic stations in 13,000 locations nationally but pre-programmed with images. Kodak debuted the concept during the 1996 Summer Olympics at Turner Field in Atlanta, and it's still in operation for pictures with sports team members.

Kodak's overall U.S. ad spending fell slightly to $92.9 million for January through August, down 3.8% from the same period in 1996, according to Competitive

In this article:
Most Popular