The industry hasn't tuned out TV. It's just moving the money to different areas. Not branded entertainment or event marketing or the Internet. Those are getting more package-goods money, but the real strategic shift is to good-old TV in China, India, Russia, Eastern Europe and Latin America, where it still works wonderfully.
The communications-planning mantra around Procter & Gamble Co. these days, as it was at Unilever before that, is about "reaching consumers at the time and place where they're most receptive to our messages." It turns out the place is most likely in a developing market and the time is now.
Consider that P&G, a relative late bloomer in global expansion, now does more business in its Eastern Europe, Middle East and Africa region than the $7 billion Reckitt Benckiser does everywhere. L'Oreal last quarter reported North American sales up 7.2%-not shabby, until you compare it to China, Russia and India, which were up 26%, 39% and 49% respectively.
True, no media guru at any company divvies up media budgets based on national growth rates. They don't have to. Brands, strategies and business units increasingly are managed globally, and the managers know where the return-on-investment really lies.
For all their talk about targeting and relationship marketing in the U.S., package-goods marketers are still mass marketers. They're just moving their marketing where the masses are, to developing markets that offer fast-rising populations and incomes combined with relatively immature markets for branded staples. U.S. and European expats are often struck by how well the classic, TV-centric marketing model still works in developing markets.
Some agencies have figured out where to focus their media efforts, too. Saatchi & Saatchi CEO Kevin Roberts has gotten his "Lovemarks" treatise serialized as a 10-part series on China's largest TV network.
The contrast is increasingly stark with the U.S., where simple economics dictate package-goods marketers must spend less relative to the broader market over time. As package-goods markets mature in the U.S., faster-growing categories and countries will command ever bigger shares of media dollars.
TV still works better here than the alternatives, so short-term-focused brand managers get all they can. But growing use of marketing-mix models has shown the industry that its runup in TV spending the past four years often produced diminishing marginal returns.
Probably faster than happened here, maturity, media fragmentation and retail consolidation will make life harder for package-goods marketers in developing markets someday, too. But right now, they can still party like it's 1946.
The knock on developing markets used to be financial and political instability. But that risk has subsided-if only in comparison to a U.S. that's more Third Worldly thanks to ballooning fiscal and trade deficits, declining currency, the threat of terrorism and warfare without end.
Not only is the world flat, a la Thomas Friedman, but it's also tilting so package-goods media dollars roll south and east.
Back in time
Fragmentation and consolidation will hit developing markets one day. But for now, it’s good times.