The increase deepens P&G's commitment to Efficient Consumer Response, the grocery industry effort to increase sales while giving better value to consumers.
P&G AT FOREFRONT
In co-equity programs, a marketer picks up the whole tab for customized local and regional advertising tied to specific retailers. While it isn't new, P&G's massive investment will clearly put it at the forefront of the discipline.
The investment also sends a strong signal to all P&G marketing agencies that ECR will lead to profound changes in the marketing process.
While $120 million is small in relation to P&G's annual $1.5 billion in U.S. ad spending, the marketer "is a large whale in a small bathtub" and any move it makes is closely watched, said Ellis Gaskell, chairman of promotion agency Gaskell & Associates, Stamford, Conn.
P&G's current co-equity budget is estimated at $40 million and handled by J. Brown/LMC Group, a unit of Grey Advertising that operates out of Stamford but maintains a 60-employee office in Chicago dedicated to P&G co-equity work.
$100 MIL, THEN $120 MIL
Executives close to P&G expect spending to increase to $100 million in P&G's current fiscal year and then to $120 million.
A P&G spokeswoman would not comment on current or future co-equity spending plans but noted that ECR "is going to change the way we think about promotions, period, meaning advertising and promotion. The door is wide open for new approaches in the industry and we are trying to figure out what approaches are for us."
FUNDING IN QUESTION
Though some executives familiar with P&G's plans suspect the co-equity drive-until now funded out of consumer and trade promotion budgets-will ultimately be funded out of P&G's national ad budget, at least one P&G insider does not anticipate that change.
Brown began developing co-equity programs five years ago for P&G, beginning with Downy and Tide and then working on Crest, Head & Shoulders, Bounty, Charmin, Gain and Pringles. To date, P&G has confined co-equity efforts to TV and direct mail.M
Contributing: Judann Pollack, Jack Neff, Laura Petrecca.