When It Comes to Branding, Marketing Bigwigs Doing More With Less

Players From Walmart to P&G Have Cut Spending Thanks to Softened Prices

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BATAVIA, Ohio (AdAge.com) -- Marketers may be branding more, but they're spending less to do it.

With inventory demand down and media rates softening, a growing chorus of marketing heavyweights including Unilever, Colgate-Palmolive Co., Alberto-Culver Co., Burger King and McDonald's have all in recent weeks claimed to reap an improved bang for the buck on their media in the last quarter, or say they will do so this year.

Walmart is the latest to say it's saving money on media so its shareholders can live better. "Media costs have come down rapidly during the last year because of the more difficult economic environment," Eduardo Castro-Wright, CEO of Walmart U.S., said on a May 14 earnings call. "As a result, our marketing team reduced advertising costs by more than 20% through more efficient media buying and a precise focus on our message." Yet he said Walmart's share of voice increased 67% over a year ago.

He didn't say Walmart necessarily had increased media impressions. How much of that 67% improvement in share of voice came from more reach per dollar, rather than recession-wracked competitors slashing spending, is something the company declined to comment on. But a person familiar with the retailer said: "I haven't seen as much of that cute little dog on TV lately," referring to rival Target's pit-bull mascot.

Walmart spending less isn't particularly good news for the media industry, as it was one of few bright spots last year. Its spending, as measured by TNS Media Intelligence, was up 62% to $863 million, more than a $330 million jump. Walmart probably was getting some extra mileage from its buy last year, too. For its fiscal year ended Jan. 31, it reported ad spending up $300 million, but that was only a 15% increase to $2.3 billion globally. That covers not just the Walmart brand in the U.S. but also international and Sam's Club, which account for about a third of the retailer's $401 billion in global sales.

Signs of savings
Walmart isn't the only one claiming big savings. Procter & Gamble Co. last quarter said ad spending as a share of sales declined about 2.4 percentage points, or $440 million, yet increased media impressions by 5% globally.

L'Oréal also smells a bargain. "We are holding to our plan to increase our advertising and promotional spend while looking to achieve even greater efficiencies in our media buys for 2009," Joseph Campinell, president of L'Oréal USA's consumer-products division, said in an e-mail statement.

While this pricing appears to be soft in some media and markets, there's still skepticism that marketers have saved big -- yet -- on TV in the U.S., which might comfort networks going into the upfront next week.

While the market is weak, there was little indication from the financial reports or conference calls of TV and cable media players last quarter that pricing had eroded yet, and media executives say the networks have been trying to hold the line on pricing. And according to people familiar with direct-response markets, big conventional marketers haven't made major shifts of dollars into remnant inventory recently.

One analyst said P&G Chairman-CEO A.G. Lafley sounded a bit less confident than Chief Financial Officer Jon Moeller about that 5% increase in media impressions on an April 30 conference call. "We have been delivering more [gross rating points] to the market," Mr. Lafley said. "It's always hard to measure, but we think in a lot of cases we are actually building our shares of voice."

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