The move, announced to the retail trade, continues Kellogg's drive to wean itself and the $9 billion cereal category from heavy trade promotion and discounts.
It's believed the massive advertising reallocation will primarily involve dollars shifted from trade promotion and coupon spending.
But an increase that large could mean Kellogg would spend in excess of $550 million on advertising in 1995-a clear windfall for media outlets and the marketer's primary U.S. ad agency, Leo Burnett USA, Chicago.
Kellogg's ad spending this year is expected to be up more than 10% when the books are closed, industry insiders say. Spending has been flat or down for four years; measured media spending in 1993 was flat at $414 million.
In the past month, Kellogg has shipped retailers a package containing a videotape of the marketer's best advertising along with a brochure bearing the headline, "Kellogg's: Making advertising our history since 1906."
The brochure reads: "Kellogg is announcing a 30% increase in advertising budgets year-to-year. This move reflects our long-term commitment to and confidence in advertising. We believe that in doing so, we are paving the road toward more profit for our brands, for the Kellogg Co. and for you."
Inside, the brochure explains how ad campaigns have boosted several key brands.
For instance, the marketer credits a great ad strategy for Frosted Mini Wheats' runaway success: The brand has doubled volume sales since 1990 and is now the nation's No. 3 cereal behind Kellogg's Frosted Flakes and General Mills' Cheerios.
In response, Kellogg will spend even more behind Frosted Mini Wheats' "Kid in you" and "Perfect angel" campaigns from Burnett; "Let's see what a big 37% increase in spending can do!" says the brochure copy.
"The intent is to stop doing things that don't build brands, and push advertising to do that brand building," said one cereal industry executive. "Kellogg and General Mills seem aligned on those goals."
In April, General Mills announced a $160 million plan to cut prices and excessive couponing, with increased advertising and new-product development the goal. Though some insiders say this summer has still seen its share of coupons, they believe General Mills has committed to reduce promotion spending in 1995.
Although Kellogg and General Mills both lost share overall during the past year, insiders say the new strategies are profitable enough to continue.
Supermarket cereal sales rose 5.9%, to $8.2 billion for the year ended June 19, but Kellogg's sales increased only 5.5%, to $2.9 billion and 35.1% of the category. General Mills' sales rose 4.6%, to $2.4 billion and a 29.1% share, according to Information Resources Inc.