P&G Slashed Beauty Ad Spending In 2012, But Cleaned Up In Household Products

What Happened? Sales of Personal Care Items Dropped While Laundry Flourished

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It was a tale of two Procter & Gambles in 2012 when it came to ad spending.

P&G slashed U.S. media spending among its beauty and personal-care lines more than 14% as measured by Kantar Media, and nearly lost its spending leadership to L'Oréal. But the nation's and world's biggest advertiser boosted outlays for household products more than 13%, extending its spending lead in the category.

Sales results largely followed suit. L'Oréal, Unilever and Estée Lauder each outgrew P&G in beauty after they sent overall beauty and personal-care measured-media spending up more than 5% to $6.9 billion.

In household products, P&G gained share in laundry detergent after two years of declines, as Tide Pods was poised to generate $500 million in retail sales its first full fiscal year.

Ad dollars flowed toward innovation, which "hasn't been as plentiful in the beauty sector as [P&G] would like," said Sanford C. Bernstein analyst Ali Dibadj.

But improving U.S. and beauty sales are high priorities for recently returned Chairman-CEO A.G. Lafley, and ending share losses for flagships like Pantene and Olay is crucial for better results, Mr. Dibadj said.

In beauty, L'Oréal and Unilever gained share on P&G in categories such as hair and skin care. L'Oréal, amid a multiyear increase in media spending, spent $1.4 billion on personal care, almost passing P&G as the category's top spender. Having made the U.S. a priority, L'Oréal collected on the bet with more than 7% sales growth in the second half. Unilever hiked spending 28% to $600 million in personal care behind launches of brands Clear and Simple.

Estée Lauder, which competes in a prestige sector from which P&G is largely absent, also outgrew P&G in terms of sales. The U.S. helped the company post 9% top-line growth in the Americas for its fiscal year ended June 30, 2012. The region finished the year strong as well, with sales up 7% for the quarter ended Dec. 31.

P&G gained 1.2 share points in liquid laundry detergent -- including Tide Pods -- in the 52 weeks ended Jan. 31, according to Nielsen data from Deutsche Bank. And while it lost 3.5 share points in powdered detergent, those results improved over the course of the year after P&G rolled back a price hike not followed by rival Church & Dwight.

For its part, Church & Dwight hiked spending 4.7%, almost twice the 2.4% category average, largely to support the extension of its OxiClean brand.

P&G also saw improving results for Bounty over the course of the year with a spending push behind Bounty DuraTowel. Though P&G still lost 0.6 share points in the paper-towel category for the year, per IRI data, it gained 1.8 share points for the last 12 weeks. Share losses for Pantene and Olay have continued into 2013.