BUDGET, NEW-MEDIA ISSUES ON FRONT BURNER

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CHICAGO-Promotion executives in a roundtable discussion last week said they're upbeat about surviving the latest crop of industry challenges, including greater pressure to develop fresh ideas with limited budgets while also exploring unknown new-media frontiers.

Jack Trout, president of New York marketing consultancy Trout & Ries, moderated the roundtable at the annual Update Conference of the Promotion Marketing Association of America. Also participating: Rick Rock, VP-media and entertainment marketing, Pepsi-Cola Co.; William W. Glickert, exec VP-sales and marketing, Molson Breweries USA; Howard Handler, senior VP-marketing, MTV: Music Television; Anne Jardine, senior VP-marketing, Kayser-Roth, marketer of No Nonsense hosiery; Curtis Viebranz, president of Time Inc. Multimedia; and Patrick Meyer, president of promotion agency Fusion 5.

On advertising budgets vs. promotional budgets:

"We're hearing some companies are directing only 30% of the [marketing] budget to advertising, which could really be a problem if advertising is keeping the brand alive," Mr. Trout said.

Pepsi's Mr. Rock said his company is "holding the line on ad spending," and the ratio of advertising to promotion spending hasn't changed, though he wouldn't disclose those ratios.

"We still believe strongly in ad spending in order to maintain our brand presence," he said.

But Kayser-Roth's Ms. Jardine said recent tough competition and declining sales in hosiery have forced her company to lower ad spending to as little as 25% to 30% of the marketing budget.

"More of our budget is going to trade promotions, which is an unfortunate sign of the times," she said. "We'd rather put our money into consumer promotions, which drive sales most effectively."

At Molson, promotion is increasingly being integrated into advertising, and below-the-line spending on new areas is heavier, including trade, distributor and retail incentives, Mr. Glickert said.

"Offering trade incentives to distributors and even employees is becoming part of our promotion program," he said. "It's a very deep integration."

Mr. Handler said MTV's overall message is so promotional it's impossible to draw a clear line between advertising and promotions.

"We use special offers and contests to deliver our message," he said, "and some of our contests have been so significant-like giving away [musician] Jon Bon Jovi's house-that they've become part of our brand."

On new brands:

"Procter & Gamble is getting rid of redundant lines and loser brands, indicating they went crazy a few years back by introducing so many new brands and line extensions," Mr. Trout said. "Now, they're setting the pace in a movement to cut back on brands."

Ms. Jardine concurred: "Line extensions were abused-too many were put out a few years ago that had no point of differentiation from one another."

But Mr. Rock said Pepsi is "going the other way" after years of offering only its core brands.

"We're in a joint venture with Lipton to bring out iced teas and a partnership with Ocean Spray for fruit beverages, and we're doing an isotonic drink," he noted. "But while we're adding new products, we're making sure to protect our core business."

Molson has also added new products recently, including Molson Ice beer, in what Mr. Glickert said is a direct response to the market's needs.

"People are looking for certain new products, and based on those trends, we've responded by adding a new product that falls into the `brand set' of contemporary, relevant products our audience wants," he said.

MTV is extending its brand into retail and selling merchandise through its association with Blockbuster Entertainment Corp. and also on TV home shopping. Mr. Handler said: "We're packaging MTV-related merchandise like we package music on the air, and it's extending our brand name into new places to reach the same audience."

On interactive media:

"As marketers, we haven't figured out how to use interactive media yet, we don't know all the ways to integrate advertising into it," Mr. Handler said. "But there are many possibilities for adding creativity and entertainment to promotions through multimedia. It's going to change our range of options dramatically."

Time Inc.'s Mr. Viebranz said interactive media is already breeding a plethora of ideas for new advertising and promotions.

"I have three proposals on my desk right now for ways to bring Las Vegas-style gambling to multimedia," he said. "I'm getting lots of original new ideas from many directions on how to bring advertising together with interactive media."

Patrick Meyer, president of Westport, Conn.-based Fusion 5, said the interactive highway is encouraging so much innovation that it has become to promotional marketing what space exploration was to U.S. industry in the 1960s.

"The information superhighway isn't fully operational," he said, "but it's already given way to promotions including interactivity and multimedia, and more are in the pipeline. It's inspiring people to try new things and experiment with interactivity."

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