Overall measured-media outlays by six industry marketers rose 26% in January from year-ago spending levels, according to a report released today by Sanford C. Bernstein. Three of six marketers covered by Bernstein hiked their January spending while three others cut back.
But excluding a spending spree by P&G, industry spending would have declined.
P&G hiked its outlay by 37.5% in January to just less than $300 million, continuing a trend of double-digit increases that began in the fourth quarter, when its spending rose 17.1% compared to year-ago levels.
Kimberly-Clark, Avon still spending
The others that hiked spending were Kimberly-Clark Corp., which increased its spending a more modest 2.6% to around $20 million, and Avon Products, which fattened spending a robust 55.1% to around $10 million, according to TNS Media Intelligence data reported by Bernstein.
Cutting their outlays in January were Clorox Co. (down 10.3% to around $36 million), Estee Lauder (down 19.7% to less than $5 million) and Colgate-Palmolive Co. (down 29.7% to around $6 million), according to the report.
Clorox and Estee Lauder, however, were coming off increases in the fourth quarter and were up against comparisons to major spending hikes in January 2007. Colgate, however, cut measured-media spending in the fourth quarter, too, and in January 2007.
The Bernstein data doesn't cover the two major European competitors in the market -- Unilever and L'Oreal, both of which trimmed spending in January compared to a year ago, according to TNS data (excluding outdoor). Unilever cut spending 6.2% to $51.5 million for the month, while L'Oreal cut spending 3.3% to $39.9 million.
Must spend in U.S.
"P&G is realizing they have to spend in the U.S., or competitors make inroads," Bernstein analyst Ali Dibadj said. "A panacea when growth slows is to spend more back."
A year ago, when P&G reported results for its fiscal third quarter (the calendar first quarter) and some investors were disappointed by organic top-line growth, a P&G spokesman noted that the company's principal competitors, such as Unilever, L'Oreal and Kimberly-Clark, traditionally do better during the period because they have new annual budgets. This year, P&G looks to be addressing that by spending more heavily.
Chairman-CEO A.G. Lafley in a conference call following the company's fiscal first-quarter results in October also expressed some remorse that the company hadn't spent more on marketing for beauty care.
He shouldn't have such regrets about this quarter. P&G had some of its biggest January increases behind Olay, Pantene, Clairol, Cover Girl and Head & Shoulders, with monthly outlays up 48% to 154% for those brands compared to January 2007.
But the U.S. media hikes also put added pressure on P&G's bottom line, also squeezed by rising commodity costs, Mr. Dibadj noted. This means the company needs to have found cost savings elsewhere or substantial top-line growth to meet its earnings targets for the recently-concluded quarter.