Time is now for smart spending

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You can't grow by shrinking. So it is welcome news that Unilever and Colgate-Palmolive Co. vow to spend more on marketing even at the risk of near-term profits. We hope Wall Street analysts are right that the moves are evidence of a rebound in marketing spending across package goods. With the power of marketing, there is no such thing as a mature category.

Let's be clear: Marketing must perform. Simply spending more isn't the answer if there are problems with the business. Boosting the outlay is smart for a company with savvy management, innovative products and fresh ideas.

In other words, it's smart to invest in marketing if you are Procter & Gamble Co., or would like to be. P&G, the world's largest advertiser, is enjoying record sales and profits and a stock price near its all-time high-results produced in part by record ad spending to move the goods.

Unilever and Colgate, battling P&G around the world, have taken out costs across their organizations. Last month they issued profit warnings-partly because they intend to keep marketing on course this quarter (no more year-end cuts to make the numbers) and increase budgets in 2005.

Colgate stock has skidded 17% since its warning; Unilever fell 7%. But this isn't about the short term. As Unilever incoming Co-Chairman Patrick Cescau said, a marketing-spending boost is "in the long-term interest of the business."

To be sure, it's not easy to gauge the marketing spending from outside. Colgate's worldwide media advertising in 2003 ($514 million) was well off its 1997 peak ($637 million). The annual report shows it increased media spending by 5.5% last year while boosting "advertising support" (media, promotion, consumer/trade incentives) by 13%.

There is more to marketing than advertising. Marketers should spend the money on whatever tactics get the desired results. Marketing is an investment. Spend wisely-but spend. Let's see Unilever and Colgate deliver on the promise-and reap the rewards.

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