Procter & Gamble ad spend increases by $445 million as it beats expectations

Procter & Gamble Co. continued to boost ad spending by $445 million in its fiscal first quarter ended Sept. 30, as it beat analyst expectations on the top and bottom lines. P&G Chief Financial Officer Andre Schulten on a media briefing call cited the $445 million in increased spending, which was similar to the $453 million increase he cited in P&G's fiscal fourth quarter. This quarter’s increase was part of a 2.6 percentage point increase in marketing spending as a percentage of sales in the fiscal first quarter, the company reported. Check out the latest Ad Age events and award programs Sales for the marketer of Tide, Pampers, Gillette, Always, Olay, Pantene and other household, health and personal care brands increased 6% to $21.9 billion in the first quarter, up 7% organically without impacts of currency, acquisitions and divestitures. Net earnings rose about 15% to $4.6 billion, with the company’s reported net earnings per share up 17%. Projecting a full-year global ad spending increase of $1.8 billion based on the past two quarters appears unrealistic, given that both those increases came against spending cuts the prior year in the face of rising commodity costs and ahead of the impact of price increases. P&G’s spending declined through its first two fiscal quarters last year, but returned to growth in the back half, so spending later this year will be against tougher comparisons. Even so, Schulten projected P&G will spend aggressively through the balance of this fiscal year. “We’ll continue to invest as long as we can drive a healthy return on investment, which is the case with marketing spending,” Schulten said. “We continue to refine our targeting methodology and roll out capabilities across the globe. So as we scale these capabilities, we are becoming more effective and efficient in our spend, which increases the return on investment and therefore is a good incentive for us.” P&G is reaping increased revenues from last year’s price hikes, which were largely meant to recoup rising commodity costs. All of its revenue gain came from higher prices, as volume declined 1% globally. But China was a primary contributor to the volume decline, with U.S. volume roughly even with last year and the company gaining share both on a volume and dollar basis, Schulten said on an investor call. Commodity costs actually declined for P&G last quarter, but those savings were offset by the effect of a rising dollar on margins, a combination Schulten said P&G expects to continue the rest of the year. Overall, P&G maintained prior guidance for the full fiscal year on revenue (up 4%-5% organically) and earnings. He said he expects the price impact on P&G revenue to decline in the current quarter and product volume to pick up in the U.S. and globally. Media measurement blog Tracking TV, social and digital updates Click here

Procter & Gamble ad spend increases by $445 million as it beats expectations

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