Despite all the talk about weaning themselves from trade promotion, food marketers have not raised ad budgets in the past few years, according to Cannondale Associates. While they've eased up on the trade habit, that's still where nearly half their marketing dollars are spent. That's because cents-off promotions and supermarket specials do move product-sometimes better than brand advertising does. The Cannondale finding puts the onus on marketers and their agencies to make the ads work harder.
"Transferring [money] from trade to the advertising line would be counterproductive," said Mark Baynes, VP-marketing for Kellogg Co.'s Morningstar Foods division, "unless we can regain credibility for the fact that brand-building advertising can deliver results."
Clearly, it's not delivering enough now. H.J. Heinz Co.-despite vowing to leverage at least half of a new $200 million marketing infusion toward the consumer-has in the past been unable to hold the line on promotion and at the same time reverse volume and share declines. That alone indicates its ads are not doing a credible enough job in conveying the value of the brand proposition.
"Trade promotion" has become less of a dirty term. Once a euphemism for shelf-space payments, it now encompasses pay-for-performance programs and account-specific marketing alliances that benefit both retailer and marketer by offering the consumer a real reason to buy beyond just a bargain price.
Now, package-goods companies must come to terms with the other half of the equation. It's time to create better advertising-or quit bemoaning the millions "wasted" on trade promotion.