Avon calling up $100 mil for global branding push

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Avon Products will spend more than $100 million next year for its first global brand campaign.

The effort will break in 26 markets worldwide during the first half of 2000, starting with the U.S. in the first quarter. It's the cosmetics direct marketer's first major in-house effort since splitting with D'Arcy Masius Benton & Bowles, New York in August (AA, Sept. 6).

Avon had suffered from not having a global effort to bring together its brand and the 2.8 million "Avon ladies" who sell its product worldwide, said Robert Gibralter, VP-global advertising. The company also has been struggling to deliver strong financial results in the face of competition from other direct marketers as well as new beauty e-tailers and specialty stores such as Sephora.

NEW CAMPAIGN

Avon unveiled the new campaign at meetings with financial analysts last week. It plans to spend $80 million to $90 million in TV, print and outdoor media worldwide -- $40 million in the U.S. alone -- and another $20 million to $30 million in sampling and promotions. Print will break in February issues of U.S. magazines, and TV will break in the U.S. late in February.

Print features shots of women and colorful backgrounds, with

text touting Avon and its products; TV spots show a variety of women, each saying "Let's talk" about a slew of topics including shopping, lipstick, the Internet and sales representatives.

The U.S. efforts have an increased focus on the Hispanic and African-American segments, where Avon has a strong brand equity, said Janice Spector, senior director-global advertising. Efforts targeted specifically at ethnic consumers will break after the initial general market effort, Ms. Spector said.

NEW PRODUCTS

The new campaign also will introduce two new products for 2000: Avon Nailwear Nail Enamel, a line of long-lasting enamels in 56 shades, and Anew Advanced All-In-One, a skin cream with anti-oxidants and sunscreen. Both will be available starting in February.

Separately, Avon announced it will spend $30 million to overhaul its U.S. Web site (avon.com) by June 2000. The site will be upgraded by IBM Corp. to allow Avon's 500,000 U.S. sales representatives to sell their products online.

Avon's reported earnings have met Wall Street expectations, but analysts are still worried about slow sales growth. Net sales for the third quarter were up only 1.4%, to $1.25 billion, from $1.23 billion in 1998, and the company announced recently it expects fourth-quarter results will be below expectations due to slow U.S. sales and currency problems overseas.

"We have been disappointed over the last six quarters to see the level of advertising spending remain roughly flat. . . . We are encouraged that Avon finally appears committed to making the required investment to spur growth of the key Avon brand," wrote Salomon Smith Barney analyst Wendy Nicholson. But she still cautioned that, given the steep competition in the U.S. cosmetics industry, "we may have to `see it to believe it' in terms of stronger U.S. beauty sales."

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