In August, Clorox said ad spending would
Bleach and charcoal brands
Some brands to benefit from the spending shift include flagship Clorox bleach and Kingsford Charcoal. Omnicom Group's DDB Worldwide, San Francisco, handles Clorox.
Speaking in a conference call with analysts, Mr. Johnston denied the shift was caused by weak sales growth and lower margins, which were squeezed by rising raw material costs.
Clorox sales were flat for the quarter at $1.05 billion, up 1% excluding impact of divestitures, as net earnings fell 11% to $129 million or 60 cents a share. Clorox had indicated earlier this year that earnings would be off due to comparisions to a strong quarter a year ago and costs associated with 14 new product launches, led by Glad Press & Seal wrap and Clorox Bleach pen.
Slotting fees (fees package goods companies pay to retailers to get shelf space) and other trade promotions behind those launches helped depress sales in the quarter, Mr. Johnston said.
"I don't think it's a change in mindset," he said of the shift from ad to promotion spending. "We simply are going to use this [marketing mix] tool we have to say where do we get the most incremental volume for the spending."